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Sagot :
Answer:
$25
Explanation:
The compound interest formula gives
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]where
A = final balance
P = principle amount
r = interest rate /100
n = # of compounds applied per interval
t = # of intervals
The interest earned, therefore, is the difference of the final balance and principle.
[tex]A-P[/tex][tex]=P(1+\frac{r}{n})^{nt}-P[/tex]Now in our case.
P = $2500
r = 1 / 100
n = 1 ( 1 year = 12 months )
t = 1 ( 12 months = 1 year )
Therefore, our formula gives
[tex]2500(1+\frac{0.01}{1})^1-2500[/tex]which simplifies to give
[tex]\begin{gathered} 2500(1+0.01)^{}-2500 \\ =\$25 \end{gathered}[/tex]This tells us that the interest earned is $25.
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