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25 April, 14:56

6 years ago, Luther won some money in the lottery and put it in a bank account that earns 8% interest compounded monthly. If Luther currently has $6,000.00 in the bank account, how much interest has he earned?

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Answers (2)
  1. 25 April, 17:11
    0
    Answer: the interest earned is $643

    Step-by-step explanation:

    We would apply the formula for determining compound interest which is expressed as

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

    Where

    A = total amount in the account at the end of t years

    r represents the interest rate.

    n represents the periodic interval at which it was compounded.

    P represents the principal or initial amount deposited

    From the information given,

    A = $6000

    r = 8% = 8/100 = 0.08

    n = 12 because it was compounded 12 times in a year.

    t = 6 years

    Therefore,.

    6000 = P (1 + 0.08/12) ^6 * 12

    6000 = P (1.0067) ^72

    6000 = 1.12P

    P = 6000/1.12

    P = 5357

    The interest earned is

    6000 - 5357 = $643
  2. 25 April, 17:17
    0
    2281.38

    Step-by-step explanation:

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

    6000=P (1+0.08/12) ^12*6

    P=6000 / (1+0.08/12) ^72

    P=3718.62

    This P value is the money he started with.

    6000-3718.62=2281.38

    Luther earned 2281 dollars over 6 years.
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