You decide you need a small nest egg of $400,000 by the time you hang it all up (retire). You have 36 years and 6 months to accumulate this amount. If you can earn 3% annually on it, what amount does the formula P = F/e^rt say you need to place in the savings account today in order to have the $400000 by the time you need it? EXAMPLE: If a borrower tells you that he needs a loan for 6 years and 3 months and will pay you an annual rate of 5 1/2% for the loan, but will give you only $141.02 back at the end of the loan term , you should only loan him $100 today.