How much did Sidney earn doing odd jobs? (compound interest)
Sidney earned some money doing odd jobs last summer and put it in a savings account that earns 11% interest compounded quarterly. After 7 years, there is $400.00 in the account. How much did Sidney earn doing odd jobs?
Sidney earned some money doing odd jobs last summer and put it in a savings account that earns 11% interest compounded quarterly. After 7 years, there is $400.00 in the account. How much did Sidney earn doing odd jobs?
1 Answer
Solve for the principle by dividing everything else.
Explanation:
the formula you were probably given looks like:
A = P(1 + r/n)^(n*t)
basically you know everything but P, so plug it in.
400 = P( 1 + .11/4)^(7*4)
note: 11% = .11
quarterly means 4 times per year., n = 4
Now, the easiest thing to do is follow orders of operation and begin to simplify the right hand side till it is a single number times P.
400 = P( 4/4 + .11/4)^28
note: 1 = 4/4 to obtain a common denominator.
400 = P(4.11/4)^28
400 = P(1.0275)^28
400 = P(2.1374)
The only thing left to do is solve for the P by dividing the single number on the right-hand side.
P = 400/2.1374
P = 187.14
therefore, she should have made $187.14 from her odd jobs.
