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

Solution

2 ye a rs a g o, St e v 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 10% in t eres t co m p o u n d e d ann u a ll y . I f St e v e 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 h e e a r n e d ?

Interest : 173.55

Solution steps

Translate the problem into an equation:

1000 = 826.44628 \dots + I

Solve for

I, 1000 = 826.44628 \dots + I : I = 173.55

Interest : 173.55