00:01
This problem wants us to calculate the present value.
00:03
If the a value given is $20 ,000, the r value of the rate is 8%, and we are told we are compounding monthly for a length of 7 years.
00:11
To find this present value, since we are dealing with a compounded plan, we will use the compounded formula, which is y equals our a value, the initial value, times 1, plus our rate, divided by the n value, raised to the n, times t.
00:25
What we are trying to find is the final amount, or the present value, so we will leave that as y, equal to our initial amount, or the initial investment, which was given as the $20 ,000.
00:36
That is going to be multiplied by 1, plus our rate.
00:39
Our rate was given as 8%, but in the formula we need to use the decimal representation, which is 0 .08, divided by the n value...
