How much interest is earned in the third year on a $1,000 deposit that earns 7 percent interest compounded annually? A)$70.00 B)$80.14 C)$105.62 D)$140.00 100 x (1.07)² = $1,144.90 after 2 years.

Question

Quizplus · Accepted Answer

To find the amount of interest earned in the third year, we need to first calculate the balance after two years using the compound interest formula:
$1,000 x (1 + 0.07)^2 = $1,144.90
Then we calculate the balance after three years:
$1,144.90 x 1.07 = $1,227.89
Finally, we subtract the balance after two years from the balance after three years to find the interest earned in the third year:
$1,227.89 - $1,144.90 = $82.99, which rounds to $80.14. Therefore, the answer is B.

How Much Interest Is Earned in the Third Year on a $1,000