Deion opened a savings account 2 years ago. The account earns 6% interest, compounded annually. If the current balance is 700.00, how much did he deposit initially?

Solution

Solution

Principal : 623

Solution steps

Translate the problem into an equation:

700 = P (1 + \frac{0.06}{1})^{1 \cdot 2}

Solve for

P, 700 = P (1 + \frac{0.06}{1})^{1 \cdot 2} : P = 623

Principal : 623

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