Question

4 years ago Lena won some money in the lottery and put it in a bank account that earns 6% interest compounded annually if Lena currently has $5,000 00 in the bank account how much interest has she earned round your answer to the nearest cent

Answer 1

For this case we can use the compound interest formula given by:

`A=P(1+(r)/(n))^(nt)`

and for this case A= 5000, r = 0.06, t= 4 and n = 1 ( compounded yearly)

`A=5000(1+(0.06)/(1))^(1\cdot4)=6312.38`

and the interest would be:

`i=6312.38-5000=1312.38`