Question

Vijay earned some money doing odd jobs last summer and put it in a savings account that earns 6% interest compounded continuously. After 1 year, there is $400.00 in the account. How much did Vijay earn doing odd jobs? Round your answer to the nearest cent.

Answer 1

The interest is 6%, compounded continuously.

After 1 year there is $400.

The continuous compound formula is

`A=P* e^(i* t)`

Where P is the principal, A is the final amount, i is the interest and t is the time in years.

Replacing all the given information, we have.

`\begin{gathered} 400=P* e^(0.06*1) \\ P=(400)/(e^(0.06)) \\ P\approx376.71 \end{gathered}`

Hence, Vijay earned $376.71 doing odd jobs.