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2 August, 23:15

Ndiba invests a sum of money in a savings account with a fixed annual interest rate of 4.61% compounded 3 times per year. After 6 years, the balance reaches 5485.85. What was the amount of the initial investment?

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  1. 2 August, 23:36
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    Answer:the amount of the initial investment was $4165

    Step-by-step explanation:

    Let P represent the Initial amount of money invested. This means that the principal is P

    It was compounded 3 times in a year. So

    n = 3

    The rate at which the principal was compounded is 4.61%. So

    r = 4.61/100 = 0.0461

    It was compounded for 6 years. So

    t = 6

    The formula for compound interest is

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

    A = total amount in the account at the end of t years. After 6 years, the balance reaches $5485.85. It means that

    A = 5485.85

    Therefore

    5485.85 = P (1+0.0461/3) ^3 * 6

    5485.85 = P (1.0154) ^18

    P = 5485.85/1.317 = 4165.4
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