Florence inherited some money from her grandfather and put it in a bank account that earns 5% interest compounded monthly. After 6 years, Florence had 600.00 in the bank account. How much interest did she earn?

Solution

Fl ore n ce inh er i t e d so m e m o n ey f ro m h er g r an df a t h er an d p u t i t in a bank a cco u n t t ha t e a r n s 5% in t eres t co m p o u n d e d m o n t h l y . A f t er 6 ye a rs, Fl ore n ce ha d 600.00 in t h e bank a cco u n t . Ho w m u c h in t eres t d i d s h e e a r n ?

Interest : 155.23

Solution steps

Translate the problem into an equation:

600 = 444.76805 \dots + I

Solve for

I, 600 = 444.76805 \dots + I : I = 155.23

Interest : 155.23