Question

Uta invests an amount into a compound interest investment account that pays 6% a year. After six years, she withdraws her total balance of $500. Using the formula mc020-1.jpg, how much money did Uta initially invest?

$180.00
$320.00
$352.48
$471.70

Answer 1

P=500÷(1+0.06)^(6)
P=352.48

Answer 2

Option C - $352.48

Explanation:

Given : Uta invests an amount into a compound interest investment account that pays 6% a year. After six years, she withdraws her total balance of $500.

To find : How much money did Uta initially invest?

Solution :

Using compound interest formula,

`A=P(1+r)^t`

Where A is the amount A=500

P is the principle

r is the rate r=6%=0.06

t is the time t= 6 years

Substitute the value,

`A=P(1+r)^t`

`500=P(1+0.06)^6`

`500=P* 1.418`

`P=(500)/(1.418)`

`P=\$352.48`

Therefore, Option C - Uta initially invest $352.48