333 views

### You put £800 in a bank account, which earns you 3.5% compound interest per year. How much interest would you have earned after seven years?

We start with £800 in the bank. As we are earning compound interest, it means that each year we get 3.5% of the original £800, plus 3.5% of any interest that has already been earned. So, at the end of the year, you will have

1.035 x (however much money was in the account at the start of the year).

Let's start with year 1. You have £800 at the start, and at the end you have

£800 x 1.035 = £828.

£828 x 1.035 = £856.98

We can also write it like this:

Money at end of year 2 = £828 x 1.035 = £800 x 1.035 x 1.035

Do you see how for each year we earn interest, we just multiply the original £800 by another 1.035?

So, after n years, the total in the account is:

£800 x 1.035n

This makes it easy to work out the total after 7 years, which is just:

£800 x 1.035=  £1017.82 (rounded to the nearest penny)

To find the interest earned, just subtract the original amount (in this case £800), and we get our answer:

£1017.82 - £800 = £217.82 interest

10 months ago

Answered by Philippa, a GCSE Maths tutor with MyTutor

## Still stuck? Get one-to-one help from a personally interviewed subject specialist

#### 780 SUBJECT SPECIALISTS

£24 /hr

Degree: Biological Sciences with a Year in Industry/Research (Bachelors) - Imperial College London University

Subjects offered:Maths, Chemistry+ 1 more

Maths
Chemistry
Biology

£20 /hr

Degree: Economics (Bachelors) - Cambridge University

Subjects offered:Maths, Economics+ 2 more

Maths
Economics
-Personal Statements-
-Oxbridge Preparation-

“Economics Graduate from Cambridge, wanting to share my passion for the discipline”

£30 /hr

Degree: Mathematics (Masters) - Warwick University

Subjects offered:Maths, Further Mathematics

Maths
Further Mathematics

“2nd year Maths student at Warwick, after a few tutorials you'll see Maths isn't the scary, hard subject most people think it is - it's actually really fun!”

Currently unavailable: for regular students

Degree: Maths and Physics (Masters) - Manchester University

Subjects offered:Maths, Physics+ 1 more

Maths
Physics
Chemistry

“About Me My name is Philippa, and I'm a third year Maths and Physics student at the University of Manchester. So many disciplines rely on maths knowledge when you get to an advanced study level, and I've met countless people who feel ...”

### You may also like...

#### Posts by Philippa

A student is measuring the acceleration due to gravity, g. They drop a piece of card from rest, from a vertical height of 0.75m above a light gate. The light gate measures the card's speed as it passes to be 3.84 m/s. Calculate an estimate for g.

You put £800 in a bank account, which earns you 3.5% compound interest per year. How much interest would you have earned after seven years?

#### Other GCSE Maths questions

Show that n^2 -n - 90 = 0

How to derive the formula for a geometric series sum

Solve the quadratic equation 3x^2 + x – 5 = 0 give answers to 3 decimal places

Which has greater area? A parallelogram with base length 10cm and perpendicular height 6cm, or a circle of diameter 8cm.

We use cookies to improve your site experience. By continuing to use this website, we'll assume that you're OK with this.