about simple interest..formula:
Interest = (Principal)(rate)(time)
I = Prt
my understanding of this question is that $ 158,000 is the maturity level / future amount (F) so how do you find the principal without the Interest (I)?
2007-06-22 07:29:37 · 6 answers · asked by it's.A.secret 1 in Science & Mathematics ➔ Mathematics
First, we will find the formula you requested.
future amount = principal + interest
F = P + I
F = P + Prt
F = P(1 + rt)
F / (1 + rt) = P
Second, we will find P using the formula.
P = F / (1 + rt)
P = 158,000 / ( 1 + (.135)(2.5))
P = 158,000 / 1.3375
P = 118,130.84 approximately
ANSWER: 118,130.84 approximately
Check:
I = Prt
I = 118,130.84(.135)(2.5)
I = 39,869.16 approximately
F = P + I
F = 118,130.84 + 39869.16
F = 158,000
2007-06-22 07:54:03 · answer #1 · answered by mathjoe 3 · 0⤊ 0⤋
According to my calculation, in order to have $158,000 in 2.5 years, earning 13.5% annually, the present value would be $115,124.41.
Assuming you have made no additional deposits, then the interest would be $42,875.59 (or the difference between your present and future values).
2007-06-22 07:44:14 · answer #2 · answered by Shannon 3 · 0⤊ 0⤋
For simple interest,
F = P + I = P + Prt = P(1 + rt)
P = F/(1 + rt)
P = $158,000/(1 + (0.135)(2.5))
P = $118,130.84
2007-06-22 07:54:32 · answer #3 · answered by Helmut 7 · 0⤊ 0⤋
P*1.135^2.5 = 158,000, if 13.5% is annual rate
P = $115,124.41
2007-06-22 07:35:03 · answer #4 · answered by sahsjing 7 · 0⤊ 0⤋
where are you finding a fund paying 13.5% interest? that's what I want to know. That's a good rate!
2007-06-22 07:37:47 · answer #5 · answered by grompfet 5 · 0⤊ 0⤋
If you assume compound interest then
P*(1.135)^2.5 = 158000 ==>
P = 115,124.
If you assume simple interest then
P*(1+2.5*.135)= 158000 ==>
P = 118,131.
2007-06-22 07:57:39 · answer #6 · answered by John V 6 · 0⤊ 0⤋