Terrell opened a savings account 10 years ago. The account earns 1% interest, compounded monthly. If the current balance is 1,000.00, how much did he deposit initially?

Solution

Terrell opened a savings account 10 years ago. The account earns 1% interest, compounded monthly. If the current balance is 1, 000.00, how much did he deposit initially?

Solution

Principal : 904.88

Solution steps

Translate the problem into an equation:

1000 = P (1 + \frac{0.01}{12})^{12 \cdot 10}

Solve for

P, 1000 = P (1 + \frac{0.01}{12})^{12 \cdot 10} : P = 904.88

Principal : 904.88

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