Given the final amount of money available in Maddy's account, the interest rate and the time elapsed, the initial money her aunt invested was $15,000.
What is an interest in banking?
Interest is simply the amount of money a lender or financial institution receives for lending out money or pays for receiving money.
The formular for calculating compound interest is expressed as;
A = P(1 + r/n)^(n*t)
Where A is final amount, P is initial principal balance, r is interest rate, n is number of times interest applied per time period and t is number of time periods elapsed.
Given the data in the question;
- Interest rate r = 5.5% anuually = 5.5/100 = 0.055
- Final amount A = $39,322
- Time r = 18 yrs
- Initial principal balance P = ?
We substitute our given values into the expression above.
$39322 = P(1 + 0.055/1)^(1*18)
$39322 = P(1 + 0.055)^(18)
$39322 = P(1.055)^(18)
P = $39322 / (1.055)^(18)
P = $39322 / 2.621466
P = $15,000
Therefore, given the final amount of money available in Maddy's account, the interest rate and the time elapsed, the initial money her aunt invested was $15,000.
Learn more about compound interest here: 27128740