Question

3 year(s) ago, Jabari had 165,300 dollars in his account. In 6 year(s), he expects to have 316,500 dollars. If he has earned and expects to earn the same return each year from 3 year(s) ago to 6 year(s) from today, then how much does he expect to have in 1 year(s) from today?  

Answer 1

Present Value will be equal.

Present value of Amount three years ago = Present value of Amount that is going to recieved in six years  

Amount1 * (1+rate)^3 = Amount2 / (1+ rate)^6

165300 * (1+rate)^3 = 316500 / (1+ rate)^6

(1+rate)^9 = 316500 /165300

1+rate = (316500 /165300 )^(1/9)

Rate = 7.484 %

Amount today = Amount1 * (1+rate)^3 = 165300 * (1+0.07484)^3 = 205261.0158

Amount he expect to have in 1 years from today = Amount today * (1+ rate) = 205261.0158 *(1+0.07484)

= 220623.12 Answer