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When Maddy was born, her aunt opened a certificate of deposit in her
honor to help send her to college some day. Now at the age of 18, there is
$39,322 in Maddy's account. How much did her aunt originally invest if
the interest rate was 5.5%? Round to the nearest dollar.

Sagot :

nuhulawal20

Given the final amount of money available in Maddy's account, the interest rate and the time elapsed, the initial money her aunt invested was $15,000.

What is an interest in banking?

Interest is simply the amount of money a lender or financial institution receives for lending out money or pays for receiving money.

The formular for calculating compound interest is expressed as;

A = P(1 + r/n)^(n*t)

Where A is final amount, P is initial principal balance, r is interest rate, n is  number of times interest applied per time period and t is number of time periods elapsed.

Given the data in the question;

  • Interest rate r = 5.5% anuually = 5.5/100 = 0.055
  • Final amount A = $39,322
  • Time r = 18 yrs
  • Initial principal balance P = ?

We substitute our given values into the expression above.

$39322  = P(1 + 0.055/1)^(1*18)

$39322  = P(1 + 0.055)^(18)

$39322  = P(1.055)^(18)

P = $39322 / (1.055)^(18)

P = $39322 / 2.621466

P = $15,000

Therefore, given the final amount of money available in Maddy's account, the interest rate and the time elapsed, the initial money her aunt invested was $15,000.

Learn more about compound interest here: brainly.com/question/27128740

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