Question

12years ago Justin Timberlake put money into an account paying 6.5% interest compounded biannually. If the account has $18,000 now, how much money did Justin Timberlake deposit?

Answer 1

$8645.73

Explanation:

Using the compound interest formula :

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

A = final amount = 18000

r = rate = 6.5% = 0.065

n = number of compounding tines per period, biannually, once in 2 years = 0.5

18000 = P(1 + 0.065/0.5)^(0.5*12)

18000 = P(1 + 0.13)^6

18000 = P(2.081951752609)

18000 / 2.081951752609 = P

= 8645.7334

= $8645.73