6 years ago, Gabby won some money in the lottery and put it in a bank account that earns 10% interest compounded annually. If Gabby currently has 1, 000.00 in the bank account, how much interest has she earned?

Solution

6 ye a rs a g o, G abb y w o n so m e m o n ey in t h e l o tt ery an d p u t i t in a bank a cco u n t t ha t e a r n s 10% in t eres t co m p o u n d e d ann u a ll y . I f G abb y c u rre n tl y ha s 1, 000.00 in t h e bank a cco u n t, h o w m u c h in t eres t ha s s h e e a r n e d ?

Interest : 435.53

Solution steps

Translate the problem into an equation:

1000 = 564.47393 \dots + I

Solve for

I, 1000 = 564.47393 \dots + I : I = 435.53

Interest : 435.53