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27 March, 20:36

ABC Bank is offering 3.6 percent compounded quarterly on its savings accounts. You deposit some amount of cash in the saving account today. After 5 years, you have $89,719 in your account. How much did you deposit today

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  1. 27 March, 20:42
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    PV = $74,999.97

    Explanation:

    Giving the following information:

    Interest rate = 0.036/4 = 0.009

    Number of quarters = 5*4 = 20

    Future value = $89,719

    We need to determine the initial inventment. We will use the following formula:

    PV = FV / (1+i) ^n

    PV = 89,719 / (1.009^20)

    PV = $74,999.97
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