John deposited $500 in a savings account at an annual interest rate of 5%. If John does not deposit or withdraw any money, what is the amount of interest John will
earn in 10 years?
$250
$750
$515
$505
The formula to calculate the amount of interest earned over a period of time with a given principal and annual interest rate is:
Interest = Principal x Rate x Time
Here, the principal is $500, the annual interest rate is 5%, and the time duration is 10 years.
Plugging in the values:
Interest = $500 x 0.05 x 10 = $250
Therefore, John will earn $250 in interest over 10 years.
The correct answer is option A: $250.