"Find a formula for the present value of $n$ dollars $k$ years from now, assuming an interest rate of $r$% compounded monthly. You can check your answer by using , $n = 10000$, $k = 1$ , and $r = 8$, comparing the result to part (a). "
The result in part (a) was: $(1+0.0066666667)^12*x=10000. $ giving $x = 9233.61$
Answer:
The present value formula is $\frac{n}{(1+(\frac{r}{100}))^k}$ for $n$ dollars $k$ years from now, assuming an interest rate of $r$% compounded anually. However we must divide $r$ by $12$ since the interest is compounded monthly. Also we must multiply $k$ by $12$ since the interest is compounded monthly. Thus our present value formula of $n$ dollars $k$ years from now, assuming an interest rate of r% compounded monthly is $\frac{n}{(1+((\frac{r}{1200}))^{12k}}$
Does anyone have advice on how to clean up my answer or if it is wrong, why?