Sandra has a savings account that has accumulated to $50,000. She started with $28,225, and earned interest at 10% compounded annually. It took her five years to accumulate the $50,000.
Calculation: $28,225/$50,000 = 0.5645. This is the present value of 1 factor, 10%, 6 periods.

Question

Quizplus · Accepted Answer

The calculation provided is incorrect. The present value factor should be calculated using the formula for compound interest, not by dividing the initial amount by the final amount. Additionally, the correct number of periods should be 5, not 6.

Sandra Has a Savings Account That Has Accumulated to $50,000