Precalculus (10th Edition)

Published by Pearson
ISBN 10: 0-32197-907-9
ISBN 13: 978-0-32197-907-0

Chapter 5 - Exponential and Logarithmic Functions - 5.7 Financial Models - 5.7 Assess Your Understanding - Page 321: 18



Work Step by Step

According to the Compound Interest Formula, where $P$ is the principal (the amount deposited), $r$ is the annual interest rate, $n$ is the number of times the interest is compounded in one year, $t$ is the number of years, $A$ is the amount the loaner gets back after $t$ years: $A=P\cdot(1+\frac{r}{n})^{n\cdot t}.$ Here $800=P\cdot\left(1+\frac{0.07}{12}\right)^{12\cdot (3.5)}\\ \frac{800}{\left(1+\frac{0.07}{12}\right)^{12\cdot 3.5}}P\\ 626.61=P$
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