Kyle earned some money doing odd jobs last summer and put it in a savings account that earns 4% interest compounded annually. After 6 years, there is 1,000.00 in the account. How much did Kyle earn doing odd jobs?Round your answer to the nearest cent.

Solution

Ky l e 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 4% in t eres t co m p o u n d e d ann u a ll y . A f t er 6 ye a rs, t h ere i s 1, 000.00 in t h e a cco u n t . Ho w m u c h d i d Ky l e e a r n d o in g o dd j o b s ? R o u n d yo u r an s w er t o t h e n e a res t ce n t .

Principal : 790.31

Solution steps

Translate the problem into an equation:

1000 = P (1 + \frac{0.04}{1})^{1 \cdot 6}

Solve for

P, 1000 = P (1 + \frac{0.04}{1})^{1 \cdot 6} : P = 790.31

Principal : 790.31