Question

There is a total of $4,840 in an account after 2 years of earning compound interest at a rate of 10%. What was the original amount invested?

Answer 1

In order to find the original amount invested, we can use the following formula:

`P=P_0(1+i)^t`

Where P is the final amount, P0 is the original amount, i is the interest rate and t is the amount of time invested.

So, using P = 4840, i = 10% = 0.1 and t = 2, we have:

`\begin{gathered} 4840=P_0(1+0.1)^2_{} \\ 4840=P_0\cdot1.1^2 \\ 4840=P_0\cdot1.21 \\ P_0=(4840)/(1.21) \\ P_0=4000 \end{gathered}`

So the original amount invested is $4,000.