A bank account currently has a balance of $7,400 dollars. If theinitial deposit was made...

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)

Solutions

Expert Solution

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

jeff jeffy answered 2 years ago

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