Ask Question
23 October, 23:30

Your grandmother has promised to give you $10,000 when you graduate from college. If you speed up your graduation by one year and graduate two years from now rather than the expected three years, the present value of this gift will:

+1
Answers (1)
  1. 23 October, 23:48
    0
    Instructions are below.

    Explanation:

    Giving the following information:

    Your grandmother has promised to give you $10,000 when you graduate from college.

    I will assume an interest rate (discount rate) of 8% compounded annually.

    To calculate the present value, we need to use the following formula:

    PV = FV / (1+i) ^n

    FV = 10,000

    i = 0.08

    n = 2

    PV = 10,000 / (1.08^2)

    PV = $8,573.39
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Your grandmother has promised to give you $10,000 when you graduate from college. If you speed up your graduation by one year and graduate ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers