fernando has $1,608 in an account. the interest rate is 1% compounded annually. to the nearest cent, how…

fernando has $1,608 in an account. the interest rate is 1% compounded annually. to the nearest cent, how much interest will he earn in 5 years? use the formula $b = p(1 + r)^t$, where $b$ is the balance (final amount), $p$ is the principal (starting amount), $r$ is the interest rate expressed as a decimal, and $t$ is the time in years.

fernando has $1,608 in an account. the interest rate is 1% compounded annually. to the nearest cent, how much interest will he earn in 5 years? use the formula $b = p(1 + r)^t$, where $b$ is the balance (final amount), $p$ is the principal (starting amount), $r$ is the interest rate expressed as a decimal, and $t$ is the time in years.

Answer

Answer:

$82.88$

Explanation:

Step1: Identify values

$p = 1608$, $r=0.01$, $t = 5$

Step2: Calculate final amount $B$

$B=p(1 + r)^t=1608\times(1 + 0.01)^5$ $B = 1608\times1.01^5$ $1.01^5=1.01\times1.01\times1.01\times1.01\times1.01 = 1.0510100501$ $B=1608\times1.0510100501\approx1690.88$

Step3: Calculate interest

Interest $=B - p$ Interest $=1690.88- 1608=82.88$