How much must you deposit in a bank account today to have $1,000 at the end of 5 years if the bank quotes a rate of 5%, compounded daily? Assume a 365-day year and round your an…

Question

asked Feb 17, 2021 110k views

1 Answer

CLiown · Answer 1 · 2021-02-23T00:02:53+0000

Answer:

PV= $774.54

Step-by-step explanation:

Giving the following information:

Future value= $1,000

Number of periods= 5*365= 1,825 days

Interest rate= 0.05/365= 0.00014

To calculate the initial investment, we need to use the following formula:

PV= FV / (1+i)^n

PV= 1,000 / (1.00014^1,825)

PV= $774.54