Fiance mathematics question

Question

An asset is known to appreciate in value by 21% (simple interest) per year. It was purchased on May 1, 2012. If it was worth $90 000 at the end of 2012, how much was it worth when it was purchased?

Answer 1

For simple interest:

A(t) = A₀·(1 + r·t)

1. A(T) = asset value at time (end of 2012) = $90,000
2. A₀ = starting value of asset = ?
3. r = annual rate as a decimal = 21% = 0.21
4. t = time in years = 8 months/12 months = 0.75 year

A(t) = A₀·(1 + r·t)

90,000 = A₀·(1 + (0.21)(0.75))

Solve for A₀