jmc

Question

The Bank of Springfield's Super High Yield savings account compounds annually at a rate of one percent. If Lisa invests 1000 dollars in one of these accounts, then how much interest will she earn after five years? (Give your answer to the nearest dollar.)

Accepted Answer

At an annual interest rate of one percent, after five years, Lisa's investment will grow to 1000 1.01^5 = 1051 dollars, to the nearest dollar. Therefore, she earns 1051 - 1000 = 51 dollars in interest.