Question

Jackson has a loan that requires a $16,700 lump sum payment at the end of four years. The interest rate on the loan is 5%, compounded annually. How much did Jackson borrow today

Answer 1

$13,739.13

Step-by-step explanation:

To determine the amount that Jackson borrowed today, we have to find the present value of $16,700

PV = FV (1 + r)^-n

FV = Future value

P = Present value

R = interest rate

N = number of years

$16,700 (1.05)^-4 = $13,739.13

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