If an amount was borrowed 5 years ago at 6% compounded quarterly, and $6000 is owed now, what was the original amound borrowed?
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Since:
Future Value = Principal (1+r)^n
you can solve for principal, where the periodic rate "r" = 0.06 / 4qtrs = 0.015, and n = 5yrs * 4 qtrs = 20...
6000 = Principal(1.015^2)
6000 = P (1.34686)
P = $4,454.82
Future Value = Principal (1+r)^n
you can solve for principal, where the periodic rate "r" = 0.06 / 4qtrs = 0.015, and n = 5yrs * 4 qtrs = 20...
6000 = Principal(1.015^2)
6000 = P (1.34686)
P = $4,454.82
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6000/(1.015)^20
4454.82
1.015 is 100% + 6%/4, compounded 4 times a year, 20 times in 5 years
4454.82
1.015 is 100% + 6%/4, compounded 4 times a year, 20 times in 5 years