And I noticed it ...

Just hadn't mentioned it ...

Now, who is it ... ?]]>

btw... why hasen't n e one said something nice bout my avatar?? u guys don't like it??

]]>= 13,158.46

This is done by using the formula

A = P*(1 + r/100)^n

Since the interest is compounded annually, r =6 and n=0, 3 and 4.

Therefore,

P = A/(1 + r/100)^n

Is that clear?

16612.38 / (1+.06)^4 = 13158.56

Does that make sense?

]]>hmmm... i'm not too sure how to compute compund interest but this is how i would do it:

use the compund interest formula:

A = P(1 + r/n)^(nt)

where t is in years, P is principal invested, and r is annual interest compunded n times per year.

our initial investment (P) is $5000, the interest is r=.06 compunded annually n=1, and t=3 (because we will be receiving more money after three years). plug these guys into the formula:

5000(1 + .06/1)^(1*3) = 5955.08

after three years, we will receive $5000 more so add that to 5955.08 which gives us 10955.08. we use the formula again but this time taking P=10955.08 and t=1.

10955.08(1+.06)^(1) = 11612.38

in the fourth year, we will receive an aditional $5000 so the total present value is:

11612.38 + 5000 = 16612.38

A person will receive $5000 now, $5000 three years from now, and $5000 four years from now. If you assume a annual interest rate of 6%, what is the total present value of this cash flow?

Thanks in advance.

-Nick

]]>