Question

Correct answers only!

To the nearest cent, how much interest will he earn in 2 years?

Use the formula B = p(1 + r)t, where B is the balance (final amount), p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.

Answer 1

Answer: $8.40

Explanation:

The problem states that Scott has deposited $40 and is earning 10% interest, annually. It asks how much interest he will earn in 2 years to the nearest cent.

First, the formula given is B=p(1+r)^t. Since Scott deposits $40, 40 would be the starting amount, p.

B=40(1+r)^t

R is the interest rate: 10%. We plug in 0.10 instead of 10% because r is the interest rate, not the percentage.

B=40(1+0.10)^t

T is time: 2 years

B=40(1+0.10)^2

Now that we have the equation filled out, we plug this into a calculator.

48.4=40(1+0.10)^2

We know that the final amount is $48.40. Unfortunately, the question is asking how much interest is earned. To find that, you would subtract the Final-Initial to get the interest.

48.4-40=8.4