Question

Mary has $50,000 in a savings account that earns interest annually at a rate of 5%. How much interest will she earn in 2 years, and what will be the total amount in her account at the end of two years?

a) Interest earned: $5,000; Total amount: $55,000
b) Interest earned: $5,500; Total amount: $55,500
c) Interest earned: $10,000; Total amount: $60,000
d) Interest earned: $2,500; Total amount: $52,500

Answer 1

Mary will earn $5,000 in interest and the total amount in her account will be $55,000 at the end of two years. Hence, a) is correct.

Step-by-step explanation:

To calculate the interest earned by Mary in 2 years, we will use simple interest formula: I = P * r * t. Here, P = $50,000 (principal), r = 5% (interest rate), and t = 2 (time in years). We have: I = 50000 * 0.05 * 2

= $5,000.

The total amount in Mary's account at the end of two years can be calculated using the formula: A = P + I. Here, P = $50,000 (principal) and I = $5,000 (interest earned). We have: A = 50000 + 5000

= $55,000.

Therefore, the correct answer is: a) Interest earned: $5,000; Total amount: $55,000.