Question

What is the present value of $13,000 to be received 4 years from today if the discount rate is 5 percent

Answer 1

$10,659.13

Step-by-step explanation:

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow each year from year 0 - 3 = 0

Cash flow in year 4 = $13000

I = 5%

Present value = $10,659.13

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute