Roy Gross is considering an investment that pays 76 percent

Roy Gross is considering an investment that pays 7.6 percent. How much will he have to invest today so that the investment will be worth $25,000 in six years? (If you solve this problem with algebra round intermediate calculations to 4 decimal places, in all cases round your final answer to the nearest penny.)

Solution

Present value from a future value can be computed as -

PV = FV / (1 + r)ⁿ

where, PV = Present value, FV = Future value, r = rate of interest, n = no. of years

PV = $25000 / (1 + 0.076)⁶ = $16,108.9184 or $16,108.92