Isabella opened a savings account 2 years ago. The account earns 5% interest, compounded quarterly. If the current balance is 400.00, how much did she deposit initially?

Solution

Solution

Principal : 362.16

Solution steps

Translate the problem into an equation:

400 = P (1 + \frac{0.05}{4})^{4 \cdot 2}

Solve for

P, 400 = P (1 + \frac{0.05}{4})^{4 \cdot 2} : P = 362.16

Principal : 362.16

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