Question

What is the present value of $992 to be received in 13.5 years from today if our discount rate is 3.5 percent?

Answer 1

Step 1:

3.5% = 0.035 (In decimal form)

Step 2:

0.035^(13.5) = 1.59109 (The compound interest in 13.5 years time)

Step 3:

1.59109 x 992 = $1578 (Money left in 13.5 years)

Done

Answer 2

623.47

Step-by-step explanation:

As the statement is asking for the present value of $992 that you will receive in 13.5 years with a discount rate of 3.5 percent, we can use the following formula:

P=F/ ((1+I)^n)

P= present value

F= future value

I= interest rate

n= time

P=992/ ((1+0.035)^13.5)

P=992/((1,035)^13.5)

P= 623.47

The present value of $992 is $623.47.