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Mimi opened a savings account 6 years ago. The account earns 1% interest, compounded monthly. If the current balance is $1,000.00, how much did she deposit initially?

Round your answer to the nearest cent.

Answer: the initial amount is $941.6

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

A = P (1 + r/n) ^nt

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

A = $1000

r = 1% = 1/100 = 0.01

n = 12 because it was compounded 12 times in a year.

t = 6 years

Therefore,.

1000 = P (1 + 0.01/12) ^12 * 6

1000 = P (1 + 0.00083) ^72

1000 = P (1.00083) ^72

1000 = 1.062P

P = 1000/1.062

P = $941.6