Kelly opened a savings account 13 years ago. She has not made any deposits or withdrawals since. The account earns 3 % interest compounded annually. The account balance is now $881. Find Kelly 's original deposit.

Question

Mathematics

Clarence

Today, 12:02

Kelly opened a savings account 13 years ago. She has not made any deposits or withdrawals since. The account earns 3 % interest compounded annually. The account balance is now $881. Find Kelly 's original deposit.

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Savion Huber · Answer 1

The final amount is given by:

F=I (1+rt)

Where

I = initial amount

r = interest rate

t = time interval

F = final amount

Now in our case

r = 1.2

t = 7

F = $126

Therefore I=F / (1+rt) = 126 / (1+1.2*7) = 13.4 dollars.