Manny’s Cookies, Ltd. is an online cookie subscription business started by a 7-year old (Manny) and his father. Manny’s Cookies
1 answer:
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Answer: $6,891
Explanation: This question requires that the principle amount be calculated. This is the current value of the lump sum saving on the first day, before interest has been compounded. In essence this is the original savings value. To calculate this value, the compound interest formula can be used. However this formula needs to be manipulated so that the principal value, P, is determined:
P =
Where:
P = Principal value: the original value of the saving on the first day, before interest has been taken into account.
A = Amount: The amount at the end of a specific period.
i = Rate of return: the profit, expressed as a an interest rate, that the savings earns periodically.
n = The amount of time that the savings is invested for.
When this formula is applied then the following answer is computed:
P =
= $6 890,887434
Rounded off to $6,891