Question

Emily opened a savings account 6 years ago. the account earns 11% interest compounded monthly lf the current balance is 800.00 how much did she despoit initially

Answer 1

Compounded interest formula:

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

where:

A= Principal + interest

P = Principal amount invested

r= interest rate =11 % = 11/100 = 0.11 (decimal form)

n= number of compounding periods in each year

t= years

Replacing:

800 = P (1+0.11/12)^6x12

800 = P ( 1.009)^72

800= P 1.93

800/1.93 =P

P = $414.73