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Popular Word Problems >

Ernesto has 20 in an account. The interest rate is 10% compounded annually.To the nearest cent, how much interest will he earn in 1 year?

Solution

E r n es t o ha s 20 in an a cco u n t . T h e in t eres t r a t e i s 10% co m p o u n d e d ann u a ll y . T o t h e n e a res t ce n t, h o w m u c h in t eres t w i ll h e e a r n in 1 ye a r ?

Solution

Interest : 2

Solution steps

Translate the problem into an equation:

22 = 20 + I

Solve for

I, 22 = 20 + I : I = 2

Interest : 2

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