Question

How much money should you invest in a savings account that pays 2.25% interest compounded quarterly to have a balance of $1,196.61 after 8 years

Answer 1

$\bf ~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\dotfill&1196.61\\ P=\textit{original amount deposited}\\ r=rate\to 2.25\%\to \frac{2.25}{100}\dotfill &0.0225\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{quarterly, thus four} \end{array}\dotfill &4\\ t=years\dotfill &8 \end{cases}$

$\bf 1196.61=P\left(1+\frac{0.0225}{4}\right)^{4\cdot 8}\implies 1196.61=P(1.005625)^{32} \\\\\\ \cfrac{1196.61}{(1.005625)^{32}}=P\implies 999.9969 \approx P$