An employee put 5,000.00 in a retirement account that offers 9% interest compounded annually. The employee makes no additional deposits or withdrawals. How much interest will the employee have earned at the end of 5 years?

Solution

implicit derivative

e m pl oyee p u t 5, 000.00 in a re t i re m e n t a cco u n t t ha t o ff ers 9% in t eres t co m p o u n d e d ann u a ll y . T h e e m pl oyee mak es n o 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 . Ho w m u c h in t eres t w i ll t h e e m pl oyee ha v e e a r n e d a t t h e e n d o f 5 ye a rs ?

Interest : 2693.12

Solution steps

Translate the problem into an equation:

7693.11977 \dots = 5000 + I

Solve for

I, 7693.11977 \dots = 5000 + I : I = 2693.12

Interest : 2693.12