SOLUTION: Find the present value of ₱1,500 after 3 years at 4% interest

Question 1175644: Find the present value of ₱1,500 after 3 years at 4% interest
Answer by greenestamps(13200) (Show Source): You can put this solution on YOUR website!

The wording of the problem is confusing.

"Find the present value..." suggests that the ₱1,500 is the FUTURE VALUE after 3 years at 4% interest, and you are to find the PRESENT value that will produce that future value.

But "after 3 years at 4% interest" suggests that ₱1,500 is the PRESENT value, and you are supposed to find the FUTURE value.

The interest rate is 4% = 0.04; the annual growth factor is 1+0.04 = 1.04. The growth factor for 3 years at 4% interest is (1.04)^3.

(1) If the ₱1,500 is the initial amount and you want to find the FUTURE value, then

(2) If the ₱1,500 is the FUTURE value and you want to find the PRESENT value, then

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