Question

Jada deposited an amount of money in a bank 3 years ago. If the bank had been paying interest at the rate of 6%/year compounded daily (assume a 365-day year) and she has $18,000 on deposit today, what was her initial deposit? (Round your answer to the nearest cent.)

Answer 1

$15,035.086

Step-by-step explanation:

Data provided in the question:

Duration of the deposit = 3 years

Interest rate paid = 6% per year

Daily interest rate =
`(6\%)/(365)`

Future value of the Amount Deposited = $18,000

now,

Present value i.e the value 3 years ago =
`\frac{\textup{Future value}}{\textup{(1+r)}^(n)}`

here,

n is duration in days i.e 3 × 365 = 1095 days

Thus,

=
`\frac{\textup{18,000}}{(1+(0.06)/(365))^(1095)}}`

or

= $15,035.086