5 years ago, Baldwin won some money in the lottery and put it in a bank account that earns 7% interest compounded annually. If Baldwin currently has 300.00 in the bank account, how much interest has he earned?

Solution

5 ye a rs a g o, B a l d w in 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 7% in t eres t co m p o u n d e d ann u a ll y . I f B a l d w in c u rre n tl y ha s 300.00 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 : 86.1

Solution steps

Translate the problem into an equation:

300 = 213.89585 \dots + I

Solve for

I, 300 = 213.89585 \dots + I : I = 86.1

Interest : 86.1