Question

Find the principal needed now to get the given amount; that is, find the present value.

To get $600 after 3 years at 5% compounded monthly.

The present value of $600 is $___
(Round to the nearest cent as needed.)

Answer 1

$523.54

Explanation:

To find the present value of $600 after 3 years at 5% compounded monthly, we can use the present value formula which is PV = FV / (1 + r/n)^(n*t), where PV is the present value, FV is the future value, r is the annual interest rate, n is the number of times compounded per year and t is the number of years

In this case, we have FV = $600, r = 0.05 (5%), n = 12 (monthly compounding), and t = 3 years. Plugging these values into the formula gives us:

PV = $600 / (1 + 0.05/12)^(12*3) = $523.54

Therefore, the present value of $600 after 3 years at 5% compounded monthly is $523.54. I hope that helps!