Math Personal Finance

What is the present value of an investment that will be worth $2000 at the end of five years? Assume an APR (Annual Percentage Rate) of 6% compounded monthly.

The present value is $_____ .

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asked by Alexis
  1. P = Po(1+r)^n = 2000

    r = (6%/12)/100% = 0.005

    n = 12comp/yr. * 5yrs. = 60 compounding
    periods.

    Po(1.005)^60 = 2000
    Po = 2000/(1.005^60) = $1482.74=Initial
    deposit or present value.

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    posted by Henry

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