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25 July, 13:21

Your father invested a lump sum 39 years ago at 4.25 percent interest. Today, he gave you the proceeds of that investment which totaled $51,780.79. How much did your father originally invest, assuming annual compounding

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  1. 25 July, 13:35
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    The correct answer is $10,214.15.

    Explanation:

    According to the scenario, the given data are as follows:

    Future value (FV) = $51,780.79

    Time period (t) = 39 years

    Rate of interest (r) = 4.25%

    So, we can calculate the amount invested by using following formula:

    Amount invested = FV : (1 + r) ^t

    = $51,780.79 : (1 + 0.0425) ^39

    = $51,780.79 : 5.06951581449

    = $10,214.15
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