Question

Lucy invested for 15 years at 2.8%, compounded annually and ended with an account balance of $2250. What was her initial deposit? Daund to the norost della

Answer 1

We can write the equation for an anually compound interest as:

`FV=PV\cdot(1+r)^n`

In this case, we want to calculate the present value, so we rearrange like:

`PV=(FV)/((1+r)^n)=(2250)/((1+0.028)^(15))=(2250)/(1.028^(15))\approx(2250)/(1.513)\approx1486.91`

Her initial deposit was $1,486.91.