Question

samir opened a savings account 7 years ago the account earns 11% interest compounded monthly if the current balance is 500.00 how much did he deposit initially

Answer 1

We know that

• The period of time is 7 years.

,

• The interest is 11% compounded monthly.

,

• The current balance is 500.

We have to use the compound interest formula

$A=P(1+\frac{r}{n})^{nt}$

Replacing the given information, we have.

$500=P(1+\frac{0.11}{12})^{12(7)}$

Then, we solve for P.

$\begin{gathered} 500=P(1+0.0092)^{84} \\ 500=P(1.0092)^{84} \\ 500=P(2.16) \\ P=\frac{500}{2.16} \\ P\approx231.48 \end{gathered}$

Hence, the initial deposit was $231.48, approximately.