5 years ago, Josie won some money in the lottery and put it in a bank account that earns 13% interest compounded annually. If Josie currently has 500.00 in the bank account, how much interest has she earned?

Solution

5 ye a rs a g o, J os i e 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 13% in t eres t co m p o u n d e d ann u a ll y . I f J os i e c u rre n tl y ha s 500.00 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 : 228.62

Solution steps

Translate the problem into an equation:

500 = 271.37996 \dots + I

Solve for

I, 500 = 271.37996 \dots + I : I = 228.62

Interest : 228.62