Question

Emmett has $100 in a savings account. The interest date is 5% per year and is not compounded. How much interest will he earn in 5 years

Answer 1

$25

Explanation:

According to the scenario, computation of the given data are as follows,

Present value = $100

Interest rate = 5% per year

So, Total amount after 5 years = P (1+rt)

Where, P = present value, r = rate , t = time

So, total amount after 5 years = $100 ( 1 + (0.05 × 5))

= $100 × 1.25

= $125

Now interest earns = Total amount after 5 years - Present value

= $125 - $100

= $25