Problema Solution
2 years ago, William won some money in the lottery and put it in a bank account that earns 3% interest compounded annually. If William currently has $800.00 in the bank account, how much interest has he earned?
Answer provided by our tutors
P = the principal
r = 0.03 or 3% annual interest rate
A = $800 the future value
t = 2 years is the time
A = P(1 + r)^t
I = A - P
Plug the values into A = P(1 + r)^t:
800 = P(1 + 0.03)^2
P(1 + 0.03)^2 = 800
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P = $754.08
I = 800 - 754.08
I = $45.92
William earned $45.82 interest.