Find the present value that will generate the future value of $1,000 at 7% compounded yearly for 6 years. (Give your answer to the nearest cent.)

Answer 1

1000=P(1+.07)^6

P=1000/1.07^6 = about $666.34

general formula is

A=P(1+r/n)^nt

where

t= time in years =6

n= number of compounding periods annually = 1

r = interest rate = 7% = .07

P= Principle= Present Value

A= ending Amount = Future Value= $1000

plug in the numbers and solve for P