Problema Solution
Find the present value of 1,400,000 if interest is paid at a rate of 7.7% compounded monthly for 10 years.
The present value is $__ (Round to the nearest cent as needed)
Answer provided by our tutors
Hi,
The compound interest formula is A = P(1+(r/n))^(n*t) with A is the future value, P the present value, r the annualrate of interest, n the number of times the interest is compound per year and t is the number of year.
applying ths formula we obtain: 1,400,000 = P*(1+(0.077/12) )^(12*10)
equivalent to 1,400,000 = P*2.1544
equivalent to P = 1,400,000/2.1544
finally the present value is P = 649814.81
good luck