Brody deposited $$ 500$ into a savings account that earns $1 %$ interest compounded annually. He makes no more deposits and no withdrawals. How much interest has Brody's account earned after $2 years$ ?

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Solution

Finding the compound interest
Given, principle $= $ 500$ , rate of interest $= 1 %$ and time $= 2 years$
We know that $C . I = A - P$ , where $C . I$ is compound interest, $A$ is amount and $P$ is the principle
$\Rightarrow C . I = A - P \Rightarrow C . I = P {(1 + \frac{r}{100})}^{n} - P [r = rate of interest, n = time] \Rightarrow C . I = 500 {(1 + \frac{1}{100})}^{2} - 500 \Rightarrow C . I = 510.05 - 500 \Rightarrow C . I = $ 10.05$
Hence, the compound interest is $$ 10.05$ .

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