Question

Sarah has $30,000 in her bank account today. Her grand-father has opened this account for her 15 years ago when she was born. Calculate the money that was deposited in the account 15 years ago if money has earned 3.5% p.a. compounded monthly through all these years.

Answer 1

Deposit value(P) = $17,760 (Approx)

Explanation:

Given:

Future value (F) = $30,000

Number of Year (n) = 15 year = 15 × 12 = 180 month

rate of interest (r) = 3.5% = 0.035 / 12 = 0.0029167

Find:

Deposit value(P)

Computation:

`A = P(1+r)^n\\\\ 30000 = P(1+0.0029167)^(180) \\\\ 30000 = P(1.68917) \\\\ P = 17760.2018`

Deposit value(P) = $17,760 (Approx)