Answer:
The present value is $117,061.7784 ≅ $117,061.78
Step-by-step explanation:
* Lets explain the simple interest rule
- The rule for the future value of a simple interest is:
A = P(1 + rt) , Where
# A = future amount
# P = Present amount
# r = Rate of Interest per year in decimal r = R/100
# t = Time period involved in days , months or years
* lets solve the problem
∵ The future amount is $123,640
∴ A = 123,640
∵ The number of days is 238 and the year has 360 days
∴ t = 238/360
∵ The simple rate is 8.5%
∴ r = 8.5/100 = 0.085
∵ A = P(1 + rt)
∴ 123,640 = P[1 + 0.085(238/360)]
∴ 123,640 = P[1 + 2023/36000]
∴ 123,640 = P[1.056194444]
- Divide both sides by 1.056194444
∴ P = 117,061.7784
* The present value is $117,061.7784 ≅ $117,061.78
