Richard opened a savings account 8 years ago. The account earns 4% interest, compounded quarterly. If the current balance is 100.00, how much did he deposit initially?

Solution

Solution

Principal : 72.73

Solution steps

Translate the problem into an equation:

100 = P (1 + \frac{0.04}{4})^{4 \cdot 8}

Solve for

P, 100 = P (1 + \frac{0.04}{4})^{4 \cdot 8} : P = 72.73

Principal : 72.73

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