Bernie invested a sum of money 7 year(s) ago in a savings account, which has since paid interest at the rate of 8% / year compounded quarterly.His investment is now worth $22,608.44.How much did he originally invest?

Question

Quizplus · Accepted Answer

We can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (the original investment), r is the annual interest rate (as a decimal), n is the number of times the interest is compounded per year, and t is the number of years.

In this case, we know that A = $22,608.44, r = 8% = 0.08 (since it's annual, we don't need to adjust for quarterly compounding), n = 4 (since it's compounded quarterly), and t = 7.

So we can solve for P:

$22,608.44 = P(1 + 0.08/4)^(4*7)
$22,608.44 = P(1.02)^28
$22,608.44 = P*1.856561
P = $12,166.19

Therefore, Bernie originally invested $12,166.19.

Bernie Invested a Sum of Money 7 Year(s) Ago in a Savings