Question

3. March deposited money into an account in which interest is compounded quarterly at a rate of 3.3%. How much did he deposit if the total amount in his account after 21 months was $4369.20, and he made no other deposits or withdrawals?

Answer 1

= $ 4344.05

Explanation:

Using the formula

A = P (1 +r/n)^nt

Where A is the amount accumulated, P is the principal amount, n is the number of interest periods, t is the time taken in years.

A = $4369.20

r = 0.033

n = 4

t = 21/12

Therefore;

$4369.20 = P ( 1 + 0.033/4)^ (21/12×4)

$4369.20 = P (1.000825)^7

$4369.20 = 1.005789 P

P = $4369.20/1.005789

= $ 4344.05