Question

Paula has $3,281 in a savings account that earns 8% interest, compounded annually.

To the nearest cent, how much interest will she earn in 1 year?

(compound interest Formula)

Answer 1

• $262.48

Explanation:

Given:

• Saving amount P = $3281
• Interest rate r = 8% or 0.08
• Compound number n = 1
• Time t = 1 year

Find the total amount in 1 year:

`I = P(1 + r/n)^(nt)-P`
`I = 3281*(1 + 0.08/1)^(1*1) -3281 = 3281*1.08 - 3281= 3281*0.08=262.48`