A student will have $1966 in the account when she graduates. The account earns 7% per year and is compounded quarterly. How much did her parents deposit in the savings account when she started high school?

1 Answer
YoshiMan007
Dec 27, 2017

#P~~$1489.47#

Explanation:

#A=P(1+r/n)^(nt)#
This formula tells us that the final amount of money, #A#, is dependent on the principal, #P#, the rate, #r#, in decimal, the number of times it is compounded in a year, #n#, and the number of years it is compounded, #t#.

From the problem statement, here's what we know:

#A=1966#
#r=.07#
#n=4# --> This is because it is compounded quarterly
#t=4# --> Assume 4 years in high school
Need to find #P#.

#1966=P(1+.07/4)^(4*4)#

#P=1966/((1+.07/4)^(4*4))#

#P~~1489.47#

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