Question

Josie has $4,000 in an account that earns 5% interest compounded annually.
To the nearest cent, how much interest will she earn in 1 year?
Use the formula B=p(1+r)t, where B is the balance (final amount), p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.
$

Answer 1

B = 4000(1 + 0.05)^1 = 4000(1.05) = 4200.00
Interest = 4200.00 − 4000.00 = $200.00