Question

Lamont earned some money doing odd jobs last summer and put it in a savings account that
earns 12% interest compounded annually. After 7 years, there is $100.00 in the account.
How much did Lamont earn doing odd jobs?

Answer 1

The lamont earned $45.235 for doing odd jobs last summer, If the 12% interest compounded annually, after 7 years there is $100.00 in the account.

Step-by-step explanation:

The given is,

                 Future value, F = $ 100.00

                          Interest, i = 12%

                   ( compounded annually )

                            Period, i = 7 years

Step:1

             Formula for Present value with compound ed annually,

                                      $F=P(1+i)^{n}$ ...........................(1)

             Substitute the known values in equation (1),

                                    $100=P(1+0.12)^{7}$           ( ∵ $i=\frac{12}{100}=0.12$ )

                                    $100=P(1.12)^{7}$

                                    $100=P(2.215)$

             Take p into the left side to find the present value,

                                      $P=\frac{100}{2.215}$

                                          $=45.2349$

                                         ≅ 45.25

                                      P = $ 45.25

Result:

             The lamont earned $45.235 for doing odd jobs last summer, If the 12% interest compounded annually, after 7 years there is $100.00 in the account.