Question

Use the formula for future value, A=P(1+rt), and elementary algebra to find the missing quantity. A=$2,160; r=5%; 1= 4 years

Answer 1

Explanation:

To find the missing quantity in the formula for future value, A = P(1 + rt), where A = $2,160, r = 5%, and t = 4 years, we can rearrange the formula to solve for P (the initial principal or present value).

The formula becomes:

A = P(1 + rt)

Substituting the given values:

$2,160 = P(1 + 0.05 * 4)

Simplifying:

$2,160 = P(1 + 0.20)

$2,160 = P(1.20)

To isolate P, divide both sides of the equation by 1.20:

$2,160 / 1.20 = P

P ≈ $1,800

Therefore, the missing quantity, P, is approximately $1,800.