Owen expects to receive at the end of next year from a trust fund. If a bank loans money at an interest rate of , how much money can he borrow from the bank on the basis of this information?

a) $18,605

Explanation:

The amount he can borrow today will be an amount that when grown at a rate of 7.5% per year will equal $20,000 in a year.

20,000 = Amount + ( Amount * rate * time)

20,000 = Amount + (7.5% * Amount)

2,000,000 = 1.075 * Amount

Amount = $18,605