# John inherited $5,000 from his grandfather. He put it in a savings account to buy a car when he turns 16. John is 13 right now. If his savings account earns 7% over the next 3 years, how much interest will he have earned?

##### 2 Answers

#### Explanation:

To calculate interest the formula is :

where P= Principle, r=rate as a decimal, t+ time in years.

(assuming simple interest)

#### Explanation:

The question does not state if simple or compound interest.

Also the wording 'could' be interpreted to mean that: The total interest gain over the whole of 3 years is 7%. This would mean an annual interest of

Note that % is a bit like units of measurement but one that is worth

So

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Assumption:

dropping the $ sign for now.

but 5000 is the same as

but

Now we put the $ back in giving

But this is for 1 year.

So 3 years is #3xx$350 = $1050