Question

future value = present value × (1 + i)t `"present value" = "future value" / (1 + i)^"t"` Todd currently has $5,000. What was the value of his money four years ago if he's earned 4 percent interest each year?

Answer 1

$4.992,16

Explanation:

We need the apply the equation for present value, and we suppose $5.000 is our future value

i is the interest=4%=0,04

t is the years =4

Introducing those values in the equation, we have:

"present value"=5.000/(1+0,04)⁰⁰⁴

Present value=5.000/1,00157

Present value=4992,16

And this present value for us is going to be the value 4 year before