Explanation Given: The future amount (A) is $ 48 , 000 , the rate ( r ) of interest is 5 % , and the time ( t ) is 8 months. Formula Used: P = A 1 + r t , where ‘A’ be the future value of the loan, ‘P’ be the principal value of loan, ‘r’ be the rate of interest and ‘t’ be the time. Calculation: Step 1: Rate is expressed as a decimal while calculating the interest. Thus, to convert the rate percent into a decimal, rate percent is divided by 100. r = 5 % = 5 100 = 0.05 Step 2: The time is to be expressed in the year. Thus, to convert the time into the year, the months are divided by 12. t = 8 months 12 months = 2 3 Step 3: In order to calculate the present value, the future amount is divided by adding 1 to the product of rate and time

Mathematics with Applications In the Management, Natural, and Social Sciences (12th Edition)

12th Edition

ISBN: 9780134767628

Author: Margaret L. Lial, Thomas W. Hungerford, John P. Holcomb, Bernadette Mullins

Publisher: PEARSON

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Chapter 5.1, Problem 24E

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To calculate: The value of present value (P) of future amount.

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Chapter 5.1, Problem 23E

Chapter 5.1, Problem 25E

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Mathematics with Applications In the Management, Natural, and Social Sciences (12th Edition)

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