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18 September, 09:47

What is the present value of $7,220 due 8 periods hence, discounted at 6%? (Round factor values to 5 decimal places, e. g. 1.25124 and final answer to 0 decimal places, e. g. 458,581.)

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  1. 18 September, 09:57
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    Answer: $4,530 (0 d. p)

    Explanation:

    To solve this you can apply the Present Value formula of,

    PV = A / (1+r) ^n

    A = Amount

    r = discount rate

    n = no. Of periods

    Slotting in the numbers we have,

    PV = 7,220 / (1 + 0.06) ^ 8

    = 4529.91732

    = $4,530 (0 d. p)

    $4,530 is the Present Value.
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