Peter opened a savings account 8 years ago. The account earns 1% interest, compounded monthly. If the current balance is 500.00, how much did he deposit initially?

Solution

Solution

Principal : 461.57

Solution steps

Translate the problem into an equation:

500 = P (1 + \frac{0.01}{12})^{12 \cdot 8}

Solve for

P, 500 = P (1 + \frac{0.01}{12})^{12 \cdot 8} : P = 461.57

Principal : 461.57

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