Precalculus: Concepts Through Functions, A Unit Circle Approach to Trigonometry (3rd Edition)

Published by Pearson
ISBN 10: 0-32193-104-1
ISBN 13: 978-0-32193-104-7

Chapter 4 - Exponential and Logarithmic Functions - Section 4.7 Financial Models - 4.7 Assess Your Understanding - Page 346: 18


$ \$ 626.61$

Work Step by Step

Present Value Formula $$P=A \left(1+\dfrac{r}{n} \right)^{-n t}$$ $A:$ Amount to be recieved after $t$ years $P:$ Present value $r:$ Annual interest rate $n:$ Number of compoundings per year $t:$ Number of years The given problem has: $A = \$ 800, r=0.07, t = 3.5$ $\text{Compounded monthly} \to n = 12$ Thus, using the given values and the formula above gives: $P=800\left(1+\dfrac{0.07}{12} \right)^{-12 \times 3.5}$ $P \approx \$ 626.61$
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