do not know what I am doing wrong

Question

Suppose you won $730,000 in the lottery and deposited the money in a savings account that paid an annual rate of 8% interest, compounded daily. How much interest would you earn in a year? (Round your answer to the nearest cent.)

answer is: 60,792.63

my answer: 730,160.50

Answer 1

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

A=730000(1+.08/365)³⁶⁵⁽¹⁾

A=790792.63 (if your parenthesis are in the wrong place when doing this you will get a number closer to 730000, make sure they are correct.)

interest earned= final-initial

790,792.63 - 730000= 60792.63

So, you'd earn $60,792.63 in one year.

It seems that your mistake came from having the parenthesis in the wrong place and not subtracting the initial amount from your final. I hope this helped.

Answer 2

Without seeing your work, I won't be able to tell you what you're doing wrong, but the way to solve this problem is to break it down into the components that go into the compounded interest formula:

Amount In account after interest (A), Initial amount/principal (P), Interest Rate (R), Period/frequency of compounding interest (N), and Time over which the account is being observed (T). These variables create the following formula:

A = P(1+R/N)^NT

A = ? , P = 730,000, R = 0.08, N = 365, T = 1

A = 730,000(1+0.08/365)³⁶⁵

A = 790,792.627

Rounding to the nearest cent A=790,792.63

The interest earned is the initial amount subtracted from the final amount:

I = 790,792.63-730,000 = $60,792.63