Kristen inherited some money from her grandfather and put it in a bank account that earns 5% interest compounded monthly. After 2 years, Kristen had 700.00 in the bank account. How much interest did she earn?Round your answer to the nearest cent.

Solution

Kr i s t e n inh er i t e d so m e m o n ey f ro m h er g r an df a t h er an d p u t i t in a bank a cco u n t t ha t e a r n s 5% in t eres t co m p o u n d e d m o n t h l y . A f t er 2 ye a rs, Kr i s t e n ha d 700.00 in t h e bank a cco u n t . Ho w m u c h in t eres t d i d s h e e a r n ? 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 : 66.48

Solution steps

Translate the problem into an equation:

700 = 633.51779 \dots + I

Solve for

I, 700 = 633.51779 \dots + I : I = 66.48

Interest : 66.48