Find the present value of $6000 payable in four years at 16% simple interest
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To find the present value of $6000 payable in four years at 16% simple interest, we can use the formula for calculating the present value of a single sum:
Present Value = Future Value / (1 + (rate * time))
In this case, the Future Value is $6000, the rate is 16% (or 0.16 as a decimal), and the time is 4 years.
So, the calculation would be:
Present Value = $6000 / (1 + (0.16 * 4))
Let's solve it step-by-step:
1. Multiply the rate (0.16) by the time (4) to get 0.64.
(0.16 * 4 = 0.64)
2. Add 1 to the result from Step 1:
(0.64 + 1 = 1.64)
3. Divide the Future Value ($6000) by the result from Step 2:
($6000 / 1.64 = $3658.54)
Therefore, the present value of $6000 payable in four years at 16% simple interest is approximately $3658.54.