Question

If the interest rate is 3% and a total of $4,370.91 will be paid to you at the end of 3 years, what is the present value of the sum

Answer 1

Answer:

The present value (or initial investment) is $4000.00

Step-by-step explanation:

I'm going to assume that the correct formula here is

$A(t)=P(1+r)^t$

and we are looking to solve for P, the principle investment.  We know that A(t) is 4370.91; r is .03 and t is 3:

$4370.91=P(1+.03)^3$ and

$4370.91=P(1.03)^3$ and

4370.91 = 1.092727P so

P = 4000.00