Question

Over the course of the last year, daniel’s investment account has grown by 6.5 % . currently, daniel has $ 5,112 in this account. what was the balance in his account one year ago, before this gain?

Answer 1

Daniel's initial balance before gaining 6.5% interest was approximately $4,800, calculated using the formula Initial Balance = Current Balance / (1 + Interest Rate).

Step-by-step explanation:

Before Daniel's investment account grew by 6.5%, he had a different amount in his account. To determine the initial balance, we calculate backwards from the current balance, which includes the interest that has been added onto the initial amount.

The formula to reverse-calculate the initial balance before the interest was added is as follows: Initial Balance = Current Balance / (1 + Interest Rate). In Daniel's case, his current balance is $5,112, and the interest rate is 6.5%, which we express as 0.065 in decimal form.

Using the formula: Initial Balance = $5,112 / (1 + 0.065), we get Initial Balance = $5,112 / 1.065

After calculating, the Initial Balance comes out to approximately $4,800.