Question

how much must you deposit in an account that pays 6.25% interest compounded annually to have a balance of $700 after 2 years​

Answer 1

`\$620.07`

Explanation:

we know that

The compound interest formula is equal to

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

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=2\ years\\A=\$700\\ r=0.0625\\n=1`

substitute in the formula above and solve for P

`700=P*(1+(0.0625)/(1))^(2)`

`700=P*(1.0625)^(2)`

`P=700/(1.0625)^(2)`

`P=\$620.07`