Question

Determine the present value P you must invest to have the future value A at simple intrest rate r after time t. A=$14,000, r=9.5%, t =4 years​

Answer 1

$10,144.93

Explanation:

Amount formula; A = (Principal* rate* time) +Principal

A= (P*r*t) +P

A= 14,000

r= 9.5% OR 0.095 as a decimal

t= 4

Plug the numbers into the formula;

14,000 = (P* 0.095 *4 ) +P

14,000 = 0.38P +P

14,000 = 1.38P

Divide both sides by 1.38 to solve for P;

14,000/1.38 = P

P= 10,144.9275

Therefore, the present value (Principal) = $10,144.93