Question

Jeff's father is planning to open a savings account to pay for Jeff's college education. He has found a bank that will pay 5 percent interest compounded daily. How much will he need to deposit initially so that in 14 years the balance will be $199,000?

Answer 1

P = $183.14

Explanation:

Given:

Rate of interest = 5% daily =0.05

Number of year = 14

Balance = $199,000

Computation:

Assume;

Number of days in a year = 365

199,000 = p[1+(0.05/365)]¹⁴⁽³⁶⁵⁾

199,000 = p[1+(0.001369)⁵¹¹⁰

199,000 = p[1086.59]

P = $183.14