Respuesta :
The compound interest is applied to the remaining balance in the account
each subsequent year.
- The amount that must be deposited is approximately $620.07
Reasons:
The given compound interest rate, r = 6.25% = 0.0625
The balance in the account after 2 years, A = $700
Required:
The required deposit, P, that gives the given account balance after 2 years.
Solution:
The following is the compound interest formula to use;
- [tex]A = \mathbf{P \times \left(1+r \right)^{ t}}[/tex]
Where;
t = 2 years
We get;
[tex]\displaystyle P = \mathbf{ \frac{A}{(1 + r)^t}}[/tex]
Which gives;
[tex]\displaystyle P = \frac{700}{(1 + 0.0625)^2} \approx \mathbf{620.07}[/tex]
- The amount that must be deposited to give $700 after 2 years is P ≈ $620.07
Learn more about compound interest here:
https://brainly.com/question/10028292
