Adam opened a savings account and deposited 100.00 as principal. The account earns 5% interest, compounded quarterly. How much interest will he earn after 6 years?Round your answer to the nearest cent.

Solution

A d am o p e n e d a s a v in g s a cco u n t an d d e p os i t e d 100.00 a s p r in c i p a l . T h e a cco u n t e a r n s 5% in t eres t, co m p o u n d e d q u a r t er l y . Ho w m u c h in t eres t w i ll h e e a r n a f t er 6 ye a rs ? R o u n d yo u r an s w er t o t h e n e a res t ce n t .

Interest : 34.74

Solution steps

Translate the problem into an equation:

134.73510 \dots = 100 + I

Solve for

I, 134.73510 \dots = 100 + I : I = 34.74

Interest : 34.74