Determine the present value P you must invest to have the future value A at simple interest rate after time t.
A=$14000 r= 9.5% t = 5years
To determine the present value (P), we can use the formula for simple interest:
A = P(1 + rt)
Given:
A = $14000
r = 9.5% (or 0.095 in decimal form)
t = 5 years
Plugging in these values into the formula, we have:
$14000 = P(1 + 0.095 * 5)
Simplifying,
$14000 = P(1 + 0.475)
Dividing both sides of the equation by (1 + 0.475),
P = $14000 / (1 + 0.475)
P ≈ $9473.68
Therefore, you must invest approximately $9473.68 to have a future value of $14000 at a simple interest rate of 9.5% after 5 years.