Question

Determine the present value P that must be invested to have the future value A at simple interest rate r after time t. A​ = ​$5000.00​, r​ = 9.5​%, t​ = 6 months ​$ ​(Round up to the nearest cent as​ needed.)

Answer 1

$6534.42

Explanation:

Put the given values into the simple interest formula and solve for the remaining variable.

A = P(1 +rt)

where P is the principal invested, r is the annual rate, and t is the number of years.

$7000 = P(1 +0.095(9/12)) = 1.07125P

$7000/1.07125 = P ≈ $6534.42

The value that must be invested is $6534.42.