The formula for annual compound interest, including principal sum, is:
A = P (1 + r/n)ⁿˣ
Where:
A = the future value = $500
P = the principal investment amount = ?
r = the annual interest = 1.08%
n = the number of times that interest is compounded per year = 1
x = the number of years = 7
So,
A = P (1 + r/n)ⁿˣ
500 = P (1 + 0.0108/1)⁷
500 = P (1.0108)⁷
500 = P × 1.078
P = 500 ÷ 1.078
P = $463.8
