Question

Francisco has a savings account balance of 2,033.88. The interest rate on the account is 2.9% compounded monthly. If he opened the account nine years ago what was the value of his initial deposit.

Answer 1

Let P = the value of the initial deposit.

Given:
A = 2,033.88, the current amount
r = 2.9% = 0.029, interest rate
n = 12, compounding interval
t = 9  years

Then
$A=P(1+ \frac{r}{n})^{nt}$

That is,
P(1 + 0.029/12)¹⁰⁸ = 2203.88
1.2978P = 2203.88
P = $1,698.17

Answer: $1,698.17