In the 48th year, interest on a $50 deposit earning 5% interest compounded annually is $2.50.
What is meant by interest?
- Interest is the cost of borrowing money or the cost of lending money. Interest is most commonly expressed as an annual percentage of the loan amount.
- This percentage is known as the loan's interest rate. Interests are topics that pique your interest and make you want to learn more about them. Interests are typically focused on learning and discovering new ideas, concepts, and knowledge, such as history, animal behavior, or even pop culture.
- Going to museums, for example, would be a hobby if history is your interest. A fee paid for borrowing money or other assets is referred to as interest. The principal is the amount borrowed. For a given time interval, interest is expressed as a percentage of the principal.
Given
Deposit that earns = $50
Interest compounded annually = 5%
50 × (1.05)²
= 55.12
Simplifying the above equation then we get,
55.12 × 0.05
= $2.50
Therefore, In the 48th year, interest on a $50 deposit earning 5% interest compounded annually is $2.50.
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