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Leah opened a savings account 2 years ago. The account earns 8% interest, compounded quarterly. If the current balance is $500.00, how much did she deposit initially

2 Answers

4 votes
We can use the formula for compound interest to solve this problem:

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

where:
A = final amount
P = principal (initial deposit)
r = annual interest rate (as a decimal)
n = number of times compounded per year
t = time elapsed (in years)

In this case, we know that the account has been open for 2 years, and that the interest is compounded quarterly (i.e., n = 4). We also know that the current balance is $500.00. We can use these values to solve for the initial deposit, P:

500 = P (1 + 0.08/4)^(4*2)

Simplifying the right-hand side:

500 = P (1.02)^8

Dividing both sides by (1.02)^8:

500 / (1.02)^8 = P

P ≈ $414.09

Therefore, Leah initially deposited approximately $414.09 into the savings account.
User Llongi
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4 votes

The amount deposited initially is $ 706.22

r = 5% = 5/100 = 0.05

1000 = p( 1 + 0.05/4 )^4x7

p( 1 + 0.05/4 )^28

p( 1.0125 )^28

p x 1.4159923

p = 1000/1.4159923

= 706.2185 = £706.22

User Juris
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8.5k points