Rick inherited some money from his grandfather and put it in a bank account that earns 4% interest compounded annually. After 7 years, Rick had 700.00 in the bank account. How much interest did he earn?

Solution

R i c k 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 4% in t eres t co m p o u n d e d ann u a ll y . A f t er 7 ye a rs, R i c k 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 h e e a r n ?

Interest : 168.06

Solution steps

Translate the problem into an equation:

700 = 531.94246 \dots + I

Solve for

I, 700 = 531.94246 \dots + I : I = 168.06

Interest : 168.06