Cooper earned some money doing odd jobs last summer and put it in a savings account that earns 6% interest compounded annually. After 3 years, there is 500.00 in the account. How much did Cooper earn doing odd jobs? Round to your answer to the nearest cent

Solution

C oo p er e a r n e d so m e m o n ey d o in g o dd j o b s l a s t s u mm er an d p u t i t in a s a v in g s a cco u n t t ha t e a r n s 6% in t eres t co m p o u n d e d ann u a ll y . A f t er 3 ye a rs, t h ere i s 500.00 in t h e a cco u n t . Ho w m u c h d i d C oo p er e a r n d o in g o dd j o b s ? R o u n d t o yo u r an s w er t o t h e n e a res t ce n t

Principal : 419.81

Solution steps

Translate the problem into an equation:

500 = P (1 + \frac{0.06}{1})^{1 \cdot 3}

Solve for

P, 500 = P (1 + \frac{0.06}{1})^{1 \cdot 3} : P = 419.81

Principal : 419.81