Finite Math and Applied Calculus (6th Edition)

Published by Brooks Cole
ISBN 10: 1133607705
ISBN 13: 978-1-13360-770-0

Chapter 2 - Section 2.1 - Simple Interest - Exercises - Page 132: 16

Answer

$\$ 22,000$

Work Step by Step

The future value ($FV=30,360$) of an investment of $PV=?$ dollars at an annual simple interest rate of $r =9.5\displaystyle \%=\frac{9.5}{100}=0.095$ for a period of $t = 4$ years is $FV=PV(1+rt)$ To find PV, divide both sides with $(1+rt)$: $ PV=\displaystyle \frac{FV}{(1+rt)}=\frac{30,360}{1+0.095\cdot 4}\approx$22,000
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