3 years ago, Barry won some money in the lottery and put it in a bank account that earns 12% interest compounded annually. If Barry currently has 1,000.00 in the bank account, how much interest has he earned?

Solution

3 ye a rs a g o, B a rry 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 12% in t eres t co m p o u n d e d ann u a ll y . I f B a rry 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 : 288.22

Solution steps

Translate the problem into an equation:

1000 = 711.78024 \dots + I

Solve for

I, 1000 = 711.78024 \dots + I : I = 288.22

Interest : 288.22