Answer
393.55
Explanation
The amount that results after an amount P is invested at compound interest at rate r% and time period t is given as
A = P (1 + r)ᵗ
For this question,
A = 800
r = 3% = 0.03
t = 2 (12) = 24 (Since the interest is compounded monthly, over 2 years)
P = ?
800 = P (1 + 0.03)²⁴
800 = P (1.03)²⁴
800 = P (2.0328)
2.0328P = 800
Divide both sides by 2.0328
(2.0328P/2.0328) = (800/2.0328)
P = 393.55
Hope this Helps!!!
Luke opened a savings account 3 years ago. the account earns 6%interest compounded quarterly if the current balance is 300.00 how much did he deposit initially
Answer
This is similar to the first one too.
A = P (1 + r)ᵗ
For this question,
A = 300
r = 6% = 0.06
t = 3 (4) = 12 (Since the interest is compounded quarterly, over 3 years; there are 4 quarters per year)
300 = P (1 + 0.06)¹²
300 = P (1.06)¹²
300 = P (2.0122)
2.0122P = 300
Divide both sides by 2.0122
(2.0122P/2.0122) = (300/2.0122)
P = 149.09
Hope this Helps!!!
