Question

Determine the present value P that must be invested to have the future A at simple interest rate r after time t A= $3000.00 r=15,0% t= 9 months Round up to nearest cent as needed

Answer 1

$2696.63

Step-by-step explanation:

The future value A and the present value P are related by the following equation

A = P(1 + rt)

Where r is the interest rate and t is the time.

Now, we need to convert 9 months to years as follows

9 months x 1 year / 12 months = 0.75 years

Then, replacing A = 3000, r = 15% = 0.15 and t = 0.75, we get:

3000 = P(1 + 0.15(0.75))

3000 = P(1 + 0.1125)

3000 = P(1.1125)

Now, we can solve for P

P = 3000/1.1125

P = 2696.63

Therefore, the present value is $2696.63