Your great aunt Matilda put some money in an account for you on the day you were born. This account pays 8% interest per year. On your 21st birthday the account balance was $5,033.83. The amount of money that your great aunt Matilda originally put in the account is closest to:

A. $600
B. $1,200
C. $800
D. $1,000

And we can solve for PV and we got:

So then the closest value for this case should be:

D. $1,000

Explanation:

We assume that we have compounding interest.

For this case we can use the future value formula given by:

Where:

FV represent the future value desired = 5033.83

PV= represent the present value that we need to find

i = the interest rate that we desire to find in fraction = 8% =0.08

n = number of times that the interest rate is compounding in 1 year, since the rate is annual then n=1

t = represent the number of years= 21 years

So then we can replace into the formula and we have:

And we can solve for PV and we got:

So then the closest value for this case should be:

D. $1,000

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