If $7,500 is to be paid now, what amount would be equivalent 8 months earlier given an interest rate of 3.88% per year?
A) $7,621.85
B) $7,310.89
C) $6,822.14
D) $6,219.65
E) $7,210.33

Question

Quizplus · Accepted Answer

To find the equivalent amount 8 months earlier, we need to discount the $7,500 using the given annual interest rate. The formula for present value is: PV = FV / (1 + r/n)^(nt). Here, FV = $7,500, r = 0.0388, n = 12 (months in a year), and t = 8/12. Calculating this gives approximately $7,310.89.

If $7,500 Is to Be Paid Now, What Amount Would