Given:
Katy has $40 in a savings account.
So, the principal = P = 40
The interest rate = r = 5% = 0.05
compounded annually, n = 1
Time = t = 3 years
So, Amount of money after 3 years = A
[tex]\begin{gathered} A=P\cdot(1+\frac{r}{n})^{nt} \\ A=40\cdot(1+\frac{0.05}{1})^3=46.305 \end{gathered}[/tex]So, the interest = A - P =
[tex]46.305-40=6.305[/tex]Rounding to the nearest cent
So, the answer will be:
interest she will earn in 3 years = $6.3
