Question

Ernesto has $20 in an account. The interest rate is 10% compounded annually.

Answer 1

The interest Ernesto will earn in 1 year to the nearest cent is 2200 cents.

Given the following data:

• Principal = $20.

• Interest rate = 10%

• Time = 1 year.

To calculate how much interest Ernesto will earn in 1 year to the nearest cent:

How to calculate compound interest.

Mathematically, compound interest is given by this formula:

$B=P(1+r)^t$

Where:

• B is the balance.

• P is the principal or starting amount.

• R is the interest rate.

• T is the time measured in years.

Substituting the given parameters into the formula, we have;

$B=20(1+0.1)^1\\\\B=20(1.1)$

B = $22.

To cents:

B = $22 \times 100$

B = 2200 cents.

Read more on interest here: brainly.com/question/24341207