Question

Your savings account currently has a balance of $32,300. You opened the savings account two years ago and have not added to the initial amount you deposited. If your savings have been earning an annual interest rate of 2 percent, compounded annually, what was the amount of your original deposit?

Answer 1

Answer:

Original deposit= $31,045.75

Explanation:

Giving the following information:

Your savings account currently has a balance of $32,300.

You opened the savings account two years ago.

Interest rate= 2 percent, compounded annually

To calculate the original sum we need to use the following formula:

PV= FV/(1+i)^n

PV= 32,300/(1.02^2)= $31,045.75