Answer:
Step-by-step explanation:
So, I'm pretty sure this is a problem about compound interest.
The formula for compound interest is A = p(1 + r/n)^nt
For this problem, $1000 is p, the initial amount; A is the total amount, or $1050.
What the problem is asking for is r, the interest rate, which is divided by n. N is the number of times the interest rate is compounded per year; Since the question is asking for the annual interest rate, N would be equal to 1. And because Terrence is has only left his money in for a year, t would also be equal to one.
So, by filling in the formula some, we get this:
$1050 = $1000(1 + r/1)^1*1
To find r, we would need to isolate it in the problem.
1. First, distribute $1000 to the parenthesis(keep in mind that 1000, is also equal to 1000/1:
1050 = (1000 + 1000r/1)^1
2. Then subtract 1000 from both sides:
50 = (1000r/1)^1
3. Multiple both sides by one:
50 = (1000r)^1
4. Divide both sides by 1000:
.05 = r^1 or .05 = r.
The answer is A, 5%.
