In: Finance
A bank account currently has a balance of $7,400 dollars. If the initial deposit was made four years ago, and the interest rate is 5% APR compounded monthly, what was the initial deposit?
(Round to the nearest cent and do not enter the dollar sign)
Current Account Balance or Future Value Of Deposit = 7400
Interest rate per month = APR/12
=5%/12
=0.004166666667
Number of Total months (n)= 4*12= 48
Deposit made or Present Value formula = Future Value/(1+i)^n
=7400/(1+0.004166666667)^48
=6061.125525
So Initial Deposit made was $6061.13