Your father invested a lump sum 24 years ago at 5.75 percent interest compounded monthly. Today,...
Your father invested a lump sum 24 years ago at 5.75 percent interest compounded monthly. Today, he gave you the proceeds of that investment which totaled $105,099.24. How much did your father originally invest?
- $15,929.47
- $16,500.00
- $17,444.86
- $26,528.00
- $27,470.75
Homework Answers
The amount is computed as shown below:
Present value = Future value / (1 + r)n
r is computed as follows:
= 0.0575 / 12 (Since interest is compounded monthly, hence divided by 12)
= 0.004791667
n is computed as follows:
= 24 x 12 (Since interest is compounded monthly, hence multiplied by 12)
= 288
So, the present value will be:
= $ 105,099.24 / (1 + 0.004791667)288
= $ 26,528 Approximately
So, the correct answer is option D i.e. $ 26,528.
Feel free to ask in case of any query relating to this question
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