Question

Manny opened a savings account 7 years ago the account earns 9%interest compounded monthly if the current balance is 400.00 how much did he deposit initially

Answer 1

We have the following:

The formula for compound interest is as follows

`\begin{gathered} A=P(1+r)^t \\ \end{gathered}`

A is amount (current balance 400), P is the principal ( deposit initially), r is the rate (0.07) and is the time ( 7 years)

replacing:

`\begin{gathered} 400=P(1+0.07)^{7^{}} \\ P=(400)/((1.07)^7) \\ P=249.09 \end{gathered}`

Which means that the initial deposit was $ 249.09