Final answer:
At an interest rate of 8% per year, $10,000 today is equivalent to $10,800 1 year from now and $9,259.26 1 year ago.
Step-by-step explanation:
Interest Calculation:
To find the amount after one year, we can use the formula:
Amount after 1 year = Principal + (Principal * Rate)
Substituting the given values:
Amount after 1 year = $10,000 + ($10,000 * 0.08) = $10,800
Time Value of Money:
To find the equivalent amount 1 year ago, we need to calculate the present value. In other words, we need to find the amount that, if invested, would have grown to $10,000 today.
Using the formula for present value
Present Value = Future Value / (1 + Rate)
Substituting the given values:
Present Value = $10,000 / (1 + 0.08) ≈ $9,259.26