## sarah_98 3 years ago ryan puts $500 into a bank account. the bank pays 5% compound interest per year. how much is the interest after one year? • This Question is Closed 1. ParthKohli Continuous compounding. $$\color{Black}{\Rightarrow 500(1 + 0.05) \large^n }$$ 2. ParthKohli $$n\textbf{ is the number of years.}$$ 3. sarah_98 ok 4. ParthKohli $$\color{Black}{\Rightarrow 500(1.05)^1 }$$ $$\color{Black}{\Rightarrow 500 \times 1.05 }$$ 5. sarah_98$525?

6. sarah_98

is it?

7. ParthKohli

This is compounded interest.

8. sarah_98

im confused :s

9. ParthKohli

And yes it is \$525 :)

10. sarah_98

oh ok there's part 2

11. ZhangYan

lol sorry parth read mistake ;)

12. ParthKohli

Interest = Amount - Principal Interest = 525 - 500 Interest = 25

13. sarah_98

work out the total amount he has in his bank account after 2 yrs

14. ParthKohli

@ZhangYan if it's one year then both simple and compound may apply :) so your answer is correct but not the method :S

15. sarah_98

work out the total amount he has in his bank account after 2 yrs