One thousand dollars in a savings account pays 7 interest per year. The interest earned after the first year is added to the account. How much interest is earned on the new principal the following yea?

After the first year, the account balance will be $1,000 + $7 = $1,007. In the second year, the interest earned will be 7% of $1,007, which equals $70.49. Therefore, the interest earned on the new principal in the following year is approximately $70.49.