Question

Jl-yoon deposited $520 into a savings account 1 year ago. Theaccount earns 5 1/2% Interest, compounded annually. How much interest has she earned? Answer in dollars and round to the nearestcent.

Answer 1

SOLUTION:

Case: Compound Interest

Method:

The Amount is given as:

$A=P(1+\frac{r}{n})^{nt}$

P=$520

t= 1 year

r= 5.5% or 0.055

n=1

Therefore:

$\begin{gathered} A=520(1+\frac{0.055}{1})^{1\times1} \\ A=520(1.055)^1 \\ A=520\times1.055 \\ A=548.60 \end{gathered}$

The Interest therefore is:

I= A - P

I= 548.60 - 520

I= $28.60.

Final answer:

The Interest,

I= $28.60.