Asked by Mireille Mathieu Ebode Nkoudou on Jun 18, 2024
Verified
What is the present value of $10,000 that will be paid to you in 4 years if the interest rate is 6%? Work it out to the nearest cent.
Present Value
The assessed current worth of a future money amount or cash flow series, using an established rate of return.
Interest Rate
The cost of borrowing money, often expressed as a percentage of the amount lent.
- Acquire an understanding of the concept of present value and the method for its calculation.
Verified Answer
AS
Annette SolisJun 18, 2024
Final Answer :
Present value =$10,000×1(1+r)n=$10,000×1(1.06)4=$10,000×11.26248=$7,920.92\text { Present value } = \$ 10,000 \times \frac { 1 } { ( 1 + r ) ^ { n } } = \$ 10,000 \times \frac { 1 } { ( 1.06 ) ^ { 4 } } = \$ 10,000 \times \frac { 1 } { 1.26248 } = \$ 7,920.92 Present value =$10,000×(1+r)n1=$10,000×(1.06)41=$10,000×1.262481=$7,920.92
Learning Objectives
- Acquire an understanding of the concept of present value and the method for its calculation.