Question

Calculate the presentvalue of $5,000 received five years from today if your investments pay a. 6 percent compounded annually b. 8 percent compounded annually c. 10 percent compounded annually d. 10 percent compounded semiannually e. 10 percent compounded quarterly

Answer 1

Answer: 3736.30 ,  3402.90 ,  3104.60 , 3069.56 , 3051.35

Explanation: We can compute present values by using the following formula :-

$=\:present\:value\:=\frac{future value}{\left ( 1+interest\:rate\right )^{no. of periods}}$

$=\:present\:value\:=\frac{5000}{\left ( 1+o.o6\right )^{1}}$ = 3736.30

$=\:present\:value\:=\frac{5000}{\left ( 1+o.08\right )^{1}}$ = 3402.90

$=\:present\:value\:=\frac{5000}{\left ( 1+o.1\right )^{1}}$ = 3104.60

$=\:present\:value\:=\frac{5000}{\left ( 1+o.1\right )^{2}}$ = 3069.56

$=\:present\:value\:=\frac{5000}{\left ( 1+o.1\right )^{4}}$ = 3051.35