To determine the present value P, we use the formula for calculating the future value of a simple interest investment:
A = P(1 + rt)
Plugging in the values we have:
6000 = P(1 + 0.025*6)
6000 = P(1.15)
P = 6000 / 1.15
P ≈ $5217.39
Therefore, the present value that must be invested to have a future value of $6000 at a simple interest rate of 2.5% after 6 years is approximately $5217.39.
Determine the present value P that must be invested to have the future value A at simple interest rate r after time t.
A = $6000, r = 2.5%, t = 6 years
1 answer
1 answer