Question

Determine the present value P you must invest to have the future valueA at simple interest rate r after time t.A=$16,000, r=3.0%, t=4yearsThe present value that must be invested to get $16,000 after 4 years at an interest rate of 3.0% is $_.Round up to the nearest cent.

Answer 1

Klyancey, this is the solution:

Let's recall the formula for calculatin the Present Value:

PV = A * (1/1 + r*t)

Replacing by the values we know:

PV = 16,000 * (1/1 + 0.03 * 4)

PV = 16,000/1.012

PV = $ 14, 285.71 (Rounding to the nearest cent)