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28 February, 22:06

What is the present value of $7,220 to be received at the end of each of 18 periods, discounted at 5% compound interest? (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. 28 February, 22:36
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    The Present Value is $6,710.

    Explanation:

    The formula to calculate Present Value is:

    Formula: Present Value = Future Value

    (1 + Discount rate) ^Number of periods

    Since the Percentage to be used annually. We can replace number of periods which is 18 by 1.5 and substitute the remaining values accordingly:

    PV = 7220

    (1+0.05) ^1.5

    PV = 6710
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