Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A person opens a savings account at a bank that earns 5% interest, compounded annually. Four years after depositing a principal sum into the account,
A person opens a savings account at a bank that earns 5% interest, compounded annually. Four years after depositing a principal sum into the account, the account contains exactly $5,000. Assuming a 5% annual interest rate is appropriate, the implied annual interest is $5,000 0.05 = $250, and the present value of the savings is $5,000 0.82270 = $4,114. How much principal did the person deposit?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started