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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