Question

Can someone PLEASE help me with this question? I just realized I went about it all wrong! D:
(Advanced Algebra with Financial Applications)

Choose one of the formulas above. Write a unique real world scenario that would be solved using the formula you chose. Solve for the present value of the scenario you wrote.

I chose Formula #1: PV = FV/(1 + i)^(nt)

Can someone help come up with a scenario? That's the part I am having the most trouble with so far.

Answer 1

@AdrianK :

Welcome to OpenStudy and I am very sorry one of our trollers had to do this to your post. A moderator will take care of this. :/

Answer 2

It's okay @kewlgeek555

Answer 3

try something like below :
you want to buy a car in 5 years,
the cost of car is... lets say $10,000; For that you're thinking of depositing some money in bank NOW such that in 5 years it grows to $10,000.

Answer 4

also u need to choose some interest rate also

Answer 5

Okay, how about 3.5% interest?

Answer 6

Good luck on your math question! You are in good hands with @ganeshie8 . ;)

Answer 7

looks good,
given that scenario, ur task is to find out HOW MUCH money you need to deposit in bank right NOW

Answer 8

lol Thank you! @kewlgeek555

Answer 9

Okay, I think I should be able to do the rest, but would you mind checking my work when I am done?

Answer 10

good, and yes :)

Answer 11

Thank you very much (:

Answer 12

np :)

Answer 13

Will the bank be charging me interest or will I be earning interest? @ganeshie8

Answer 14

I'll be earning interest right?

Answer 15

you have deposited ur money into bank
so u will be earning interest - ur money will be growing...

Answer 16

Just double checking! lol

Answer 17

good to double/triple check :)b

Answer 18

wat about compounding interval ?

Answer 19

u going wid annual compounding / monthly ?

Answer 20

Yes, I am (: I was going to do monthly

Answer 21

sounds good :)

Answer 22

Okay, so far I decided to deposite $3,000 (I just guessed to see if it would work) so my formula looks like this:

$3,000 = $10,000/(1 + 0.035)^(12*5)
(Without doing anything with the $3,000) I ended up with $1,269.34

Is any of this correct?

Answer 23

@ganeshie8

Answer 24

nope, u need to use Present Value formula

Answer 25

I chose Formula #1: PV = FV/(1 + i)^(nt)

Answer 26

That's the one I used

Answer 27

your goal is to have $10,000 in 5 years
PV gives you how much u need to deposit in bank now

Answer 28

FV = 10,000
i = 0.0325/12
n = 12
t = 5

Answer 29

Ohh

Answer 30

so,

\(\large PV = \frac{10,000}{(1+\frac{0.0325}{12})^{12\times 5}}\)

Answer 31

simplify

Answer 32

where did you get 0.0325?

Answer 33

oops sorry,
it has to be 0.035

Answer 34

Corrected below :

\(\large PV = \frac{10,000}{(1+\frac{0.035}{12})^{12\times 5}}\)

Answer 35

Okay thats better lol I'll try that one!

Answer 36

okie

Answer 37

I got $8,396.70 (rounded off it would be $8,396.71) @ganeshie8

Answer 38

Ya there? lol @ganeshie8

Answer 39

I had to get the assignment submitted, so sorry for being impatient. Thank you for all of your help! You are awesome! :D

Answer 40

hey sorry i just got notification... openstudy is lagging for me :/

Answer 41

yes, 8396.71 is right !
http://www.wolframalpha.com/input/?i=+%5Cfrac%7B10%2C000%7D%7B%281%2B%5Cfrac%7B0.035%7D%7B12%7D%29%5E%7B12%5Ctimes+5%7D%7D

Answer 42

use more words in explaining ur scenario ok ?

Answer 43

remember, this is a written problem....

Answer 44

u need to explain ur scenario/example well and also explain how u got ur answer as well

Answer 45

I did all of that! I should be okay! (: @ganeshie8

Answer 46

good :)