Question

Find the principal needed now to get the amount; that is, find the present value.

To get $100 after 2 years at 6% compounded monthly

Answer 1

Step 1 : 

Present value formula :

Step 2 :

The amount is

The rate of interest is

The time period is years.

The interest compounded monthly, thus

Substitute these values in above equation.

The principal value

Solution :

The principal value