To determine how much will she have we need to use the compound interest formula:
where A is the final amount, P is the principal, r is the interes rate in decimal form, n is the number of times the interest is compounded per unit time and t is the time.
In this case we have tha P=$50, r=0.05, n=1 (since the interest is compound annually) and t=3, plugging this values in the formula we have:
Therefore, after 3 years Karen will have $57.88