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daisybobbitt99
Answered

Money is invested into an account earning 4.25% interest compounded annually. If the accumulated value after 18 years will be $25,000, approximately how much money is presently in the account?

a.

$5,875

b.

$11,820

c.

$19,125

d.

$23,960

Verified Answer :

MissPhiladelphia

We are given with the following:
Effective annual interest, i = 0.0425
Future worth, F = $25000
Number of years, n = 18

We use the formula to solve for the present worth of the money:
P = F / (1 + i)^n
P = 25000 / (1 + 0.0425)^18
P = 11818.73

The closest answer is:
b.
$11,820

The amount of money that is presently in my investment account is $11,820.

How much is presently in my account?

The formula that can be used to determine the amount in my account presently is:

P = FV / (1 + r)^n

  • FV = Future value
  • P = Present value
  • R = interest rate
  • N = number of years

25,000 / (1.0425)^18 = $11,820

To learn more about present value, please check: https://brainly.com/question/18760477