Jim inherited some money from his grandfather and put it in a bank account that earns 1% interest compounded quarterly. After 7 years, Jim had 500.00 in the bank account. How much interest did he earn?

Solution

J im inh er i t e d so m e m o n ey f ro m hi s 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 1% in t eres t co m p o u n d e d q u a r t er l y . A f t er 7 ye a rs, J im ha d 500.00 in t h e bank a cco u n t . Ho w m u c h in t eres t d i d h e e a r n ?

Interest : 33.76

Solution steps

Translate the problem into an equation:

500 = \frac{4 ^{28} \cdot 125}{1.93189 E 16} + I

Solve for

I, 500 = \frac{4 ^{28} \cdot 125}{1.93189 E 16} + I : I = 33.76

Interest : 33.76