Group Problem 10 Interest is money earned (paid) for the use of money. The total amount invested (borrowed) is called principal. The rate of interest, expressed as a percent, is the amount charged for the use of the principal for a given period of time, usually on a yearly (per annum) basis. 1. Suppose $1000 is placed into a savings account paying 6% per year compounded annually (meaning that the interest is computed at the end of each year). (a) What is the interest earned for the first year? (b) If the interest earned after each year is left to accumulate, how much is in the account after the first year? (It is going to be a new principal for the second year). (c) How much money will be in the account after the end of the second year? (d) After the end of the third year? 2. Start with P dollars in an account paying an interest rate of r (expressed as a decimal) compounded annually and develop the formula for the amount of money A, present in the account (a) After the first year; (b) After the second year; (c) After the third year; (d) After t years