josie has $4,000 in an account that earns 5% ...
josie has $4,000 in an account that earns 5% interest compounded annually. to the nearest cent, how much interest will she earn in 1 year?
Answer
# Answer:
$200.00
# Explanation:
## Step1: Identify the formula
The formula for compound - interest when compounded annually for 1 year is $I = P\times r$, where $P$ is the principal amount and $r$ is the annual interest rate (in decimal form).
## Step2: Convert the interest rate to decimal
The interest rate $r = 5\%=0.05$. The principal amount $P = 4000$.
## Step3: Calculate the interest
$I=P\times r=4000\times0.05 = 200$. So the interest earned in 1 year is $200.00$.