Brody deposited $500 into an account that
earns 4.2% interest compounded annually. He
makes no additional deposits and no withdrawals.
Approximately how much interest will the account
have earned after 7 years?
A $167
B $420
C $542
D $665

Question

Brody deposited $500 into an account that
earns 4.2% interest compounded annually. He
makes no additional deposits and no withdrawals.
Approximately how much interest will the account
have earned after 7 years?
A $167
B $420
C $542
D $665

tkhunny · Answer

Have you considered calculating the value after 7 years?

Year 0 500
Year 1 500(1.042)
Year 2 500(1.042)^2

etc.

anonymous · Answer

Do I add them up after I'm done or subtract?

tkhunny · Answer

It is an ongoing accumulation.  There is no "adding up".