Laura deposits $2,000 in an account that has an annual interest rate of 1.96%, compounded monthly. How much interest will she earn at the end of 1 month? Round to the nearest cent.

The formula for calculating compound interest is:

\[
A = P \left(1 + \frac{r}{n}\right)^{nt}
\]

Where:
- $ A $ is the amount of money in the account after interest.
- $ P $ is the principal (initial amount deposited).
- $ r $ is the annual interest rate (as a decimal).
- $ n $ is the number of times the interest is compounded per year.
- $ t $ is the time the money is invested for (in years).

For this problem:
- $ P = 2000 $ (the principal).
- $ r = 0.0196 $ (the annual interest rate of 1.96% expressed as a decimal).
- $ n = 12 $ (since the interest is compounded monthly).
- $ t = \frac{1}{12} $ (since we're calculating for 1 month).

Now, we can plug in the values:

\[
A = 2000 \left(1 + \frac{0.0196}{12}\right)^{12 \times \frac{1}{12}} = 2000 \left(1 + \frac{0.0196}{12}\right)
\]

Let's calculate this.Laura will earn approximately **$3.27** in interest at the end of 1 month, rounded to the nearest cent.

Would you like more details or have any questions? 

Here are 5 related questions to extend your understanding:
1. How much interest will Laura earn in 6 months?
2. What would be the total amount in her account after 1 year?
3. How does the interest change if the rate increases to 2.5% annually?
4. What happens if the interest is compounded daily instead of monthly?
5. How long will it take for Laura's deposit to grow to $2,500 at this interest rate?

**Tip:** The more frequently interest is compounded, the more quickly the investment grows!

Learn how to calculate the interest earned on a $2,000 deposit with an annual interest rate of 1.96%, compounded monthly. This solution uses the compound interest formula to find the amount of interest earned at the end of 1 month, rounded to the nearest cent. Ideal for high school students learning about exponential growth and interest rates.

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