Isabella has $100 in a savings account that earns 5% interest per year. The interest is not compounded. How much interest will she earn in 1 year?
Use the formula i = prt, where i is the interest earned, p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.
Given:
p = $100
r = 0.05
t = 1 year
Using the formula i = prt:
i = (0.05)($100)(1)
i = $5
Isabella will earn $5 in interest in 1 year.