Question

Danny invested $350 at a rate of 2.5% for 3 years. How much interest did he earn on his investment?

Answer 1

Answer:

$26.91

Step-by-step explanation:

Assuming that the interest is compounded annually, we have the formula $A=P(1+r)^{t}$

A is the total amount.

P is the starting or principal amount

r is the rate, usually as a percentage

t is the times compounded

So, from the problem, we see that:

P = $350

r = 2.5% or 0.025

t = 3 yrs

Substituting variables, we get:

$A = (350)(1+0.025)^{3}$

$A=376.91$

So, our total amount is around $376.91, but they are asking us to find the interest. We subtract the total amount from the starting amount:

$376.91 - $350 = $26.91

You should check my answer though in case I make mistakes.