A 9-month term deposit, earning interest at 7%, was worth $72,559 when it reached maturity today. How much had been invested at the beginning of the term?
A) $76,368
B) $68,940
C) $72,552
D) $67,480
E) $70,000

Question

Quizplus · Accepted Answer

To find the initial investment, we use the formula for compound interest: Final Amount = Principal * (1 + rate)^time. Here, the rate is 7% annually, so for 9 months (0.75 years), the formula becomes $72,559 = Principal * (1 + 0.07*0.75). Solving for Principal gives approximately $68,940.

A 9-Month Term Deposit, Earning Interest at 7%, Was Worth