problem: compound interest problem 3
example: Frank receives € 18 982,99 capital including compound interest after 11 years of saving; interest rate 6%.
question: How much was the present value of the capital 11 years ago.
answer: compound interest problem 3
1. step: given/wanted
present value (prv) = € 18 982,99
annual interest rate (r) = 6%
number of periods (n) = 11 years
past value (pav) = capital excluding compound interest before 11 years?
2. step: calculate
past value = pav
present value = prv
r = annual rate
n = number of periods
pav = prv : (1 + r)n
pav = 18 982,99 : (1 + 0,06)11
pav = € 10 000,-
3. step: answer
The capital excluding compound interest 11 years ago was € 10 000,-.