document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1187059>Question 1187059</A>: <I><SPAN STYLE=\"word-break: break-all;\"> What is the present value of an investment that will be worth $25,000 at the end of five years? Assume an APR of 5% compounded monthly.<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #818021 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=818021\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> the formula to use for this problem is:\r<BR>\n" );
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document.write( "f = p * (1 + r) ^ n\r<BR>\n" );
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document.write( "f is the future value<BR>\n" );
document.write( "p is the present value<BR>\n" );
document.write( "r is the interest rate per time period<BR>\n" );
document.write( "n is the number of time periods\r<BR>\n" );
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document.write( "in your problem:\r<BR>\n" );
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document.write( "f = 25000<BR>\n" );
document.write( "p = what you want to find.<BR>\n" );
document.write( "r = .05/12 (formula uses the rate, not the percent).<BR>\n" );
document.write( "n = 5 * 12 = 60\r<BR>\n" );
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document.write( "your time periods are in months, so rate per year is divided by 12 to get rate per month, and 5 years is multiplied by 12 to get 60 months.\r<BR>\n" );
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document.write( "formula becomes:\r<BR>\n" );
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document.write( "25000 = p * (1 + .05/12) ^ (5 * 12)\r<BR>\n" );
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document.write( "solve for p to get:\r<BR>\n" );
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document.write( "p = 25000 / ((1 + .05/12) ^ (5 * 12)) = 19480.13476.\r<BR>\n" );
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document.write( "you can also use a financial calculator like the one found at <a  rel=nofollow HREF= \"https://arachnoid.com/finance/index.html\" target = \"_blank\">https://arachnoid.com/finance/index.html</a>\r<BR>\n" );
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document.write( "your inputs are shown below:\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2021/110202.jpg\" >\r<BR>\n" );
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document.write( "your output is shown below:\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2021/110203.jpg\" >\r<BR>\n" );
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document.write( "the calculator uses the percent, not the rate.<BR>\n" );
document.write( "you can't enter 5/12.<BR>\n" );
document.write( "it doesn't know what to do with that.<BR>\n" );
document.write( "you have to enter the result of 5/12 = .41666666667.<BR>\n" );
document.write( "give it enough sixes so that it will give you a more detailed answer.<BR>\n" );
document.write( "8 or 9 of them is enough.<BR>\n" );
document.write( "you can round at the end with a 7, or just leave it as sixes.<BR>\n" );
document.write( "the calculator will display only 6 of them and it will round the last digit displayed.\r<BR>\n" );
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document.write( "you can see that the answer is the same as the one you got with the formula, except it's rounded to 2 decimal digits.\r<BR>\n" );
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document.write( "either way, your answer is that the present value is 19,480.13 rounded to 2 decimal digits.\r<BR>\n" );
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document.write( "it is important to get the interest rate per time period and the number of tiem periods right.\r<BR>\n" );
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document.write( "in this problem the time periods were in months.\r<BR>\n" );
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