Need Help

Youngka

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Apr 15, 2020
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An obligation of $2000 is due December 31 2019. what is the value of the obligation on june 30 2016 at j4=5.5%
 
From April 30, 2016 to Dec. 31, 2019 is 3 years and 8 months so 3+ 8/12= 3 and 2/3 years. Let the value in 2016 be "V". If you put V into the bank at 5.5% simple interest in 3 and 2/3= 11/3 years it will have earned (0.055)(11/3)V= 0.202V interest and be worth V+ 0.202V= 1.202V. Set that equal to $2000 and solve for V: 1.202V= 5000 so V= 5000/1.202= $4159.73.
 
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