Based on the given problem above, here is the solution:
Given: $10,000 = current amount
5% = interest each year
? = amount or value of money 5 years ago
So first, we are going to find 5% of $10, 000. 10,000 x 0.05 would be 500.
So each year, Pierce's money increases $500. In order to know how much money she had five years ago, we multiply $500 by 5. The answer would be $2500. Next, $10,000 - $2,500 = $7,500. So five years ago, the value of his money was $7,500.
