Question

Your father invested a lump sum 39 years ago at 4.25 percent interest. Today, he gave you the proceeds of that investment which totaled $51,780.79. How much did your father originally invest, assuming annual compounding

Answer 1

The correct answer is $10,214.15.

Step-by-step explanation:

According to the scenario, the given data are as follows:

Future value (FV) = $51,780.79

Time period (t) = 39 years

Rate of interest (r) = 4.25%

So, we can calculate the amount invested by using following formula:

Amount invested = FV ÷ ( 1+ r)^t

= $51,780.79 ÷ ( 1 + 0.0425)^39

= $51,780.79 ÷ 5.06951581449

= $10,214.15