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Aaron opened a savings account 3 years ago. The account earns 14% interest, compounded monthly. If the current balance is 1,000.00, how much did he deposit initially?

Solution

Aaron opened a savings account 3 years ago. The account earns 14% interest, compounded monthly. If the current balance is 1, 000.00, how much did he deposit initially?

Solution

Principal : 658.65

Solution steps

Translate the problem into an equation:

1000 = P (1 + \frac{0.14}{12})^{12 \cdot 3}

Solve for

P, 1000 = P (1 + \frac{0.14}{12})^{12 \cdot 3} : P = 658.65

Principal : 658.65

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