Answer:
$25
Step-by-step explanation:
According to the scenario, computation of the given data are as follows,
Present value = $100
Interest rate = 5% per year
So, Total amount after 5 years = P (1+rt)
Where, P = present value, r = rate , t = time
So, total amount after 5 years = $100 ( 1 + (0.05 × 5))
= $100 × 1.25
= $125
Now interest earns = Total amount after 5 years - Present value
= $125 - $100
= $25
