Question 201085

Present Value formula:  {{{P = A/(e^rt)}}}, where P = present value, A = future value, e = 2.7182818, r = interest rate, and t = time, in years.



{{{P = A/(e^rt)}}}  =  {{{P=15000/(2.7182818^((.061*5)))}}}


{{{P=15000/(2.7182818^(.305))}}}  =  {{{P=15000/1.356625}}} = {{{highlight(P=11056.85)}}}


Therefore, a present value amount of $11,056.85 will yield $15,000 in 5 years, at an interest rate of 6.1%.