 |
| ||
| |||
|
| Math Central | Quandaries & Queries |
|
Question from Michelle, a parent: Present Value of $1500 to be paid in Year 7, with an interest rate of 12% |
Hi Michelle.
You don't provide much information to go on, so I will assume some things:
- You want the total amount at that time including principal and interest.
- Interest is compounded annually at 12%.
- Year 7 means 7 years later.
The formula for annually-compounded interest is:
T = P(1 + i)n
where
- T = the total value at the end of the time period,
- P = the principal value at the beginning of the time period,
- i = the annual interest rate, expressed as a decimal (12% = 0.12) and
- n = the number of years.
In your case, P = $1500, i = 0.12 and n = 7. Plug the numbers into your calculator to finish the problem.
Stephen.
| ||
| ||
| ||
 |
 |
|
Math Central is supported by the University of Regina and The Pacific Institute for the Mathematical Sciences.