<PRE><B>Question 1185091</B>
if the 800 dollars is to be received 13 years from now, and the interest rate is 8% per year compounded annually, then:


the formula to use is:


f = p * (1 + r) ^ n


f is the future value
p is the present value
r is the interest rate per time period (the rate, not the percent).
n is the number of time periods.


the formula becomes:


800 = p * (1 + .08) ^ 13


to solve for the present value, divide both sides of this equation by (1 + .08) ^ 13 to get:


800 / (1 + .08) ^ 13 = p


solve for p to get:


p = 800 / 1.08 ^ 13 = 294.1583397.


what this says is:


if you got 294.1583397 today and invested it at 8% per year, compounded annually, you would have 800 at the end of the 13th year.





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