Alex is a personal trainer and deposits 5,000 from his earnings into a savings account that earns 6% annual compound interest. He won’t make any additional deposits or withdrawals for 7 years. How much interest will Alex accrue at the end of 7 years?

Solution

A l e x i s a p erso na l t r ain er an d d e p os i t s 5, 000 f ro m hi s e a r nin g s in t o a s a v in g s a cco u n t t ha t e a r n s 6% ann u a l co m p o u n d in t eres t . He w o n ’ t mak e an y a dd i t i o na l d e p os i t s or w i t h d r a w a l s f or 7 ye a rs . Ho w m u c h in t eres t w i ll A l e x a ccr u e a t t h e e n d o f 7 ye a rs ?

Interest : 2518.15

Solution steps

Translate the problem into an equation:

7518.15129 \dots = 5000 + I

Solve for

I, 7518.15129 \dots = 5000 + I : I = 2518.15

Interest : 2518.15