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Explain Bot To find the present value of an amount due in the future, considering the interest rate, we can use the formula for calculating present value:
Present Value = Future Value / (1 + r)^n
Where:
- Future Value is the amount due in the future
- r is the interest rate (expressed as a decimal)
- n is the number of periods
In this case, the future value is $6000, the interest rate is 9%, and the number of periods is 8 months.
Step 1: Convert the interest rate to a decimal
9% = 0.09
Step 2: Convert the number of periods to years
8 months = 8/12 = 2/3 years
Step 3: Calculate the present value using the formula
Present Value = 6000 / (1 + 0.09)^(2/3)
Step 4: Solve the equation
Present Value = 6000 / (1.09)^(2/3)
To calculate this, you can use a calculator or a spreadsheet software. The present value after solving this equation will give you the answer.