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?

MYTUTOR SUBJECT ANSWERS

Answers / Maths / GCSE / 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?

301 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.

Now let's think about year 2. You start with £828, and end with

£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 1.035⁷= £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

Philippa M. A Level Maths tutor, GCSE Maths tutor, 13 Plus Maths tut...

8 months ago

Answered by Philippa, a GCSE Maths tutor with MyTutor

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

579 SUBJECT SPECIALISTS

Emma B. GCSE Maths tutor, A Level Maths tutor, 11 Plus Maths tutor, G...

View profile

£18 /hr

Emma B.

Degree: Mechanical Engineering (Masters) - Southampton University

Subjects offered:Maths, Physics+ 1 more

“A positive and bubbly tutor who will put 100% into helping your child succeed and discover their passion for learning!”

5.0

1 review | 1 completed tutorial

Save profile

Akhil P. GCSE Biology tutor, A Level Biology tutor, GCSE Chemistry tu...

View profile

£20 /hr

Akhil P.

Degree: Medicine (Bachelors) - Imperial College London University

Subjects offered:Maths, Physics+ 6 more

“First Year Medical student at Imperial College. Studies all 3 sciences and Maths at A-levels and did an EPQ(4 A*s and an A)”

5.0

4 reviews | 8 completed tutorials

Save profile

Dan W. GCSE Economics tutor, A Level Economics tutor, 11 Plus Maths t...

View profile

£18 /hr

Dan W.

Degree: Economics and Accounting (Bachelors) - Bristol University

Subjects offered:Maths, Economics

“I achieved top grades whilst juggling cricket at a high level. I’ve tutored for Young Einstein Tuition & been a Peer Mentor to those facing personal issues”

5.0

9 reviews | 40 completed tutorials

Save profile

See more GCSE Maths tutors

About the author

View profile

Philippa M.

Currently unavailable: for regular students

Degree: Maths and Physics (Masters) - Manchester University

Subjects offered:Maths, Physics+ 1 more

“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 ...”

5.0

11 reviews | 27 completed tutorials

Save profile

Version:	3.48.0
Build:	c981a57a9cf4
Time:	2017-07-24T15:36:26Z

MYTUTOR SUBJECT ANSWERS

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?

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

579 SUBJECT SPECIALISTS

About the author

You may also like...

Posts by Philippa

Other GCSE Maths questions

One-to-one help is at your fingertips