Lauren earned some money doing odd jobs last summer and put it in a savings account that earns 2% interest compounded monthly. After 8 years, there is 700.00 in the account. How much did Lauren earn doing odd jobs? write three decimals

Solution

L a u re n 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 2% in t eres t co m p o u n d e d m o n t h l y . A f t er 8 ye a rs, t h ere i s 700.00 in t h e a cco u n t . Ho w m u c h d i d L a u re n e a r n d o in g o dd j o b s ? w r i t e t h ree d ec ima l s

Principal : 596.58

Solution steps

Translate the problem into an equation:

700 = P (1 + \frac{0.02}{12})^{12 \cdot 8}

Solve for

P, 700 = P (1 + \frac{0.02}{12})^{12 \cdot 8} : P = 596.58

Principal : 596.58