Clara opened a savings account 10 years ago. The account earns 12% interest, compounded monthly. If the current balance is 1, 000.00, how much did she deposit initially?

Solution

Solution

Principal : 302.99

Solution steps

Translate the problem into an equation:

1000 = P (1 + \frac{0.12}{12})^{12 \cdot 10}

Solve for

P, 1000 = P (1 + \frac{0.12}{12})^{12 \cdot 10} : P = 302.99

Principal : 302.99

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