Liam opened a savings account 9 years ago. The account earns 6% interest, compounded annually. If the current balance is 400.00, how much did he deposit initially?

Solution

Solution

Principal : 236.76

Solution steps

Translate the problem into an equation:

400 = P (1 + \frac{0.06}{1})^{1 \cdot 9}

Solve for

P, 400 = P (1 + \frac{0.06}{1})^{1 \cdot 9} : P = 236.76

Principal : 236.76

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