Use the following information to answer the question(s)below.
Your great aunt Matilda put some money in an account for you on the day you were born.This account pays 8% interest per year.On your 21st birthday the account balance was $5033.83.
-The amount of money that your great aunt Matilda originally put in the account is closest to:
A)$600.
B)$800.
C)$1000.
D)$1200.

Question

Quizplus · Accepted Answer

We can use the formula for compound interest to find the principal amount (P) that was originally deposited:
A = P(1 + r/n)^(nt)
where A is the final amount ($5033.83), r is the interest rate (8%), n is the number of times per year that interest is compounded (1 in this case), and t is the number of years (21).
Substituting the given values, we get:
$5033.83 = P(1 + 0.08/1)^(1*21)
Solving for P, we get:
P = $1000.00
Therefore, the closest answer choice is C) $1000.

Use the Following Information to Answer the Question(s)below