Question

Polly sells goods to customers in exchange for a $10,000 noninterest-bearing note due in 3 years. The interest rate on this type of loan is 6%. What is the present value of the note

Answer 1

Answer:

present value = $8396.19

Explanation:

given data

cash flow = $10,000

rate r = 6 %

time period t = 3 years

to find out

present value of the note  

 

solution

we get here present value that is expressed  as

present value =   $\frac{cash\ flow}{(1+r)^t}$     ....................1

put here value and we will get present value

present value = $\frac{10000}{(1+0.06)^3}$  

solve it we get

present value = $8396.19