Suppose you have two bank accounts, one called Account A and another Account B. Account A will be worth $6,500.00 in one year. Account B will be worth $12,600.00 in two years. Both accounts earn 6% interest. What is the present value of each of these accounts?

Answer 1

Account A:
P = Po + Po*r*t = $6500.
Po + Po*0.06*1 = 6500.
Po + 0.06Po = 6500.
1.06Po = 6500.
Po = $6,132.08 = Present value.

Account B:
Same procedure as A.