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Lucy invested for 15 years at 2.8%, compounded annually and ended with an account balance of $2250. What was her initial deposit? Daund to the norost della

Answer :

We can write the equation for an anually compound interest as:

[tex]FV=PV\cdot(1+r)^n[/tex]

In this case, we want to calculate the present value, so we rearrange like:

[tex]PV=\frac{FV}{(1+r)^n}=\frac{2250}{(1+0.028)^{15}}=\frac{2250}{1.028^{15}}\approx\frac{2250}{1.513}\approx1486.91[/tex]

Her initial deposit was $1,486.91.

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