Question

Calculate the present value of each of the following:
a. $10000 in five years at 8% per annum compunded annually
b. $5000 in three years at 9% pe annum compounded monthly

Answer 1

Compound Interest. Make sure you remember this equation. Whatever helps to remember, use it.
\[A=P(1+r)^n\]
Where:
"A" is the amount compounded
"P" is the amount invested.
"r" is the rate at which the money is compounded
"n" is the period of time that the money was compounded

Answer 2

a)\[A=$10000(1+0.08)^{5}\]

Answer 3

but won't we use the geometric sequence for mula to solve?

Answer 4

Okay do you have the answers to part a and b? If you do, can you show me the answer to part a please?

Answer 5

a. 6805.83
b. 3820.74

i tried the formula that you suggested and it gives me the right answer but just curious to
why the geometric sequence formula doesn't work in this case?

Answer 6

oh! i used P=10000/(1.08)^5 and it gives me thr right answer

Answer 7

Geometric formula?

Answer 8

GP? ar^n-1?

Answer 9

Sn=a(r^n-1)/(r-1)

Sn= sum of n number of terms
n= the number of terms
r= common ratio

its used for annuities

Answer 10

Ah okay. the question befuddled me for a second. In this question, you're not finding the total amount/sum of the amount. You're finding the amount invested.

Answer 11

The amount you originally put in to get $10000

Answer 12

The sum of GP does work.

Answer 13

\[S _{n}=\frac{ a(r^n-1) }{ r-1 }\]
In that, you're trying to find a.

Answer 14

Oops I wrote the wrong one.
It's meant to be 1-r^n and 1-r

Answer 15

because r<1, that's why you got the wrong answer.

Answer 16

@hellomiss

Answer 17

lemme try that one

Answer 18

\[S _{n}=\frac{ a(1-r^n) }{1-r }\]

Answer 19

thanks!

Answer 20

no worries.