Question

If 7000 is deposited at 7% for 5 years, then find the interest earned. The interest is compounded yearly.$2818$3000$7000$9818

Answer 1

The given information is:

- The principal P=$7000

- The annual interest rate R is 7%

- The time is T=5 years.

The compounded yearly interest formula is:

$A=P(1+R)^T$

Where A is the amount after T years, P is the principal, R is the interest rate.

If we replace the known values, we obtain:

$\begin{gathered} A=7000(1+0.07)^5 \\ A=7000(1.07)^5 \\ A=7000*1.403 \\ A=9817.86 \end{gathered}$

Now, subtract the principal and find the interest earned:

$\begin{gathered} I=A-P \\ I=9817.86-7000 \\ I=2817.86 \\ I\approx2818 \end{gathered}$

The answer is $2818