Answer:
$25
Step-by-step explanation:
The compound interest formula gives

where
A = final balance
P = principle amount
r = interest rate /100
n = # of compounds applied per interval
t = # of intervals
The interest earned, therefore, is the difference of the final balance and principle.


Now in our case.
P = $2500
r = 1 / 100
n = 1 ( 1 year = 12 months )
t = 1 ( 12 months = 1 year )
Therefore, our formula gives

which simplifies to give

This tells us that the interest earned is $25.