Vince earned some money doing odd jobs last summer and put it in a savings account that earns 3% interest compounded annually. After 10 years, there is 800.00 in the account. How much did Vince earn doing odd jobs?

Solution

Vin ce 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 3% in t eres t co m p o u n d e d ann u a ll y . A f t er 10 ye a rs, t h ere i s 800.00 in t h e a cco u n t . Ho w m u c h d i d Vin ce e a r n d o in g o dd j o b s ?

Principal : 595.28

Solution steps

Translate the problem into an equation:

800 = P (1 + \frac{0.03}{1})^{1 \cdot 10}

Solve for

P, 800 = P (1 + \frac{0.03}{1})^{1 \cdot 10} : P = 595.28

Principal : 595.28