Question

Leon has $50 in a savings account that earns 10% interest, compounded annually. To the nearest cent, how much interest will he earn in 2 years?

Answer 1

$10.50

Explanation:

Interest = future value - amount saved

The formula for calculating future value:

FV = P (1 + r)^n

FV = Future value

P = Present value

R = interest rate

N = number of years

$50 x (1.1)^2 = $60.50

Interest = $60.50 - $50 = $10.50