Determine the present value P you must invest to have the future value A at simple interest rate r after time t.A = $14 comma 00014,000, r = 5.55.5%, t = 55 yearsEquation : A=p(1+rt)
Accepted Solution
A:
Answer:p = $3,478.26Step-by-step explanation:Since they give you the formula for the future value at simple interest rate, and we need to find the present value p, we can solve for the variable p in the formula, isolating it on one side of the equal sign, and then replacing the known values to find the numerical answer:1) Solve for p first in the formula:[tex]A=p(1+r\,t)\\\frac{A}{(1+r\,t)} = p\\p=\frac{A}{(1+r\,t)}[/tex]2) we replace A with the given $14,000, t with 55 years, and r with the decimal form of the 5.5 percent rate, that is: 0.055:[tex]p=\frac{A}{(1+r\,t)}\\p=\frac{14,000}{1+0.055\,*\, 55} \\p=\frac{14,000}{1+3.025} \\p=\frac{14,000}{4.025} \\p=3478.26[/tex]Therefore,the present value to be invested is: $3,478.26