Question

Money is invested into an account earning 4.25% interest compounded annually. If the accumulated value after 18 years will be $25,000, approximately how much money is presently in the account?

Answer 1

B on edg

Explanation:

Answer 2

Answer: $11,820

Explanation:

The formula to calculate the compound amount after x years is given by :-

`A=P(1+r)^x`, where r is the rate of interest.

Given: The accumulated value A= $25000

The rate of interest r= 4.25%=0.0425

Let P be the present value invested in the account.

Now,according to the question,we have

`25000=P(1+0.0425)^(18)\\\\\Rightarrow\ 25000=P(2.11528624641)\\\\\Rightarrow\ P=(25000)/(2.11528624641)\\\\\Rightarrow\ P=11818.7314092\approx\$11820......[\text{to the nearest tens}]`

Hence, the amount of money presently in the account =$11,820