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\:=(future value)/(\left ( 1+interest\:rate\right )^(no. of periods))`

`=\:present\:value\:=(5000)/(\left ( 1+o.o6\right )^(1))` = 3736.30

`=\:present\:value\:=(5000)/(\left ( 1+o.08\right )^(1))` = 3402.90

`=\:present\:value\:=(5000)/(\left ( 1+o.1\right )^(1))` = 3104.60

`=\:present\:value\:=(5000)/(\left ( 1+o.1\right )^(2))` = 3069.56

`=\:present\:value\:=(5000)/(\left ( 1+o.1\right )^(4))` = 3051.35