Question

2. Over the last ten years, Mary Catherine’s original deposit to her savings account at her local branch of the MakesomeMoney Bank has grown to $15,000. If she had invested a single amount, made no additional payments, and earned 6.4 percent compounded annually on her deposit, how much did Mary Catherine deposit?

Answer 1

Answer:

The deposit was of $4,337.69

Explanation:

Giving the following information:

Final value= 15,000

Interest rate= 6.4%

Number of years= 10

To calculate the original deposit, we need to use a variation of the final value formula:

FV=PV*(1+i)^n

Isolating PV (present value):

PV= FV/(1+i)^n

PV= 15,000/(1.064)^10= $4,337.69