How much must you deposit in an account that pays 7% annual interest compounded yearly to have a balance of $550 after 5 years?

Question

2 years ago

10

Please answer quick! Thank uuu

1 answer:

myrzilka [38] · Answer 1 · 2022-02-28T11:49:16+03:00

Answer:

Correct answer: Deposit D = 392 $

Step-by-step explanation:

Given:

The ultimate value or balance B = 550 $

interest rate r = 7 % in decimal notation r = 0.07

n = 5 years accounting period

Deposit D = ?

This is a compound interest account to which the following formula applies:

B = D (1 + p)ⁿ ⇒ D = B / (1 + p)ⁿ

D = B / (1 + p)ⁿ = 550 / (1 + 0.07)⁵ = 550 / 1.4 = 392.14 ≈ 392 $

D = 392 $

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