problem: compound interest problem 4
example: Anna receives € 32 504,02 capital including compound interest after 8 years of saving; interest rate 5%.
question: How much was the present value of the capital 8 years ago.
answer: compound interest problem 4
1. step: given/wanted
present value (prv) = € 32 504,02
annual interest rate (r) = 5%
number of periods (n) = 8 years
past value (pav) = capital excluding compound interest before 8 years?
2. step: calculate
past value = pav
present value = prv
r = annual rate
n = number of periods
pav = prv : (1 + r)n
pav = 32 504,02 : (1 + 0,05)8
pav = € 22 000,-
3. step: answer
The capital excluding compound interest 8 years ago was € 22 000,-.