Question

Spencer has $20 in a savings account that earns 5% interest per year. The interest is not

compounded. How much interest will he earn in 1 year?

Answer 1

Since the interest is not compounded, the interest earned in 1 year is simply 5% of the principal amount of $20.

The interest earned can be calculated as:

Interest = Principal x Rate

Interest = $20 x 0.05

Interest = $1

Therefore, Spencer will earn $1 in interest in 1 year.