Determine the present value

Question

Determine the present value, P, you must invest to have the future value, A, at simple interest rate r after time t. Round answer to the nearest dollar.

A = $621.00, r = 14%, t = 3 months

$601.00

$600.00

$6014.00

$150.00

Answer 1

Future Value = Present Value + Interest

 

Present Value = Future Value - Interest = $621 - Interest where Interest = Present Value* interest rate * t

 

Present Value = 621 - Present Value * .14 * 3/12 = 621 - Present Value * .035

 

Present Value * (1 + .035) = $621 

 

Present Value = $621/1.035 = $600