Todd currently has $5,000. What was the value of his money four years ago if he's earned
4 percent interest each year?

Question

Todd currently has $5,000. What was the value of his money four years ago if he's earned 
4 percent interest each year?

anonymous · Answer

Kate wants to have $25,000 in 16 years. How much does she need to invest if the interest rate is 6 percent per year

anonymous · Answer

You didn't actually finish your question but from the multiple choice answers it would seem that you meant to say:

"Interest rate is 6 percent per annum compounded annually"

instead of the cryptic:

"Interest rate is 6 percent per?"

which you wrote.

You will, or at least should remember that the future value equation is:

FV = PV * ( 1 + i )^t

Where FV is Future value
PV is Present value
i is the true effective annual interest rate as a fraction of 1
t is the number of years that the investment will be held for.

You can rewrite this equation to read:

PV = FV / ( 1 + i )^t

Plug in your numbers and you would have:

PV = $25,000 / ( 1 + 0.06 )^16
.:
PV = $9,841.16