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Determine the present value P that must be invested to have the future value A at simple interest rate after time t. A= $4500 r= 16% t= 2 years Round up to the nearest cent

Answer :

Step 1

Given; Determine the present value P that must be invested to have the future value A at simple interest rate after time t.

A= $4500 r= 16% t= 2 years

Round up to the nearest cent

Step 2

Future value is given as;

[tex]A=P(1+r)^t[/tex][tex]\begin{gathered} r=\frac{16}{100}=0.16 \\ A=\text{\$}4500 \\ t=2\text{ years} \end{gathered}[/tex]

Step 3

[tex]\begin{gathered} 4500=P(1+0.16)^^2 \\ P=\frac{4500}{(1+0.16)^2} \\ P=\text{ \$}3344.23 \end{gathered}[/tex]

Answer;

[tex]\text{ P=\$3344.23 to the nearest cent}[/tex]

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