Answer:
e. $1,260.33
Explanation:
If the annual rate is 6%, the monthly interest rate 'r' is:
[tex]r= \frac{6\%}{12}=0.5\%[/tex]
The present value 'P' of an investment 'F', discounted at a monthly rate 'r' for a period of 'n' years is:
[tex]P=\frac{F}{(1+r)^{12*n}}[/tex]
If the future value after 5 years at a rate of 0.5% per month is $1,700, the present value is:
[tex]P=\frac{\$1,700}{(1+0.005)^{12*5}}\\P=\$1,260.33[/tex]
The present value is $1,260.33.
