Final answer:
The present value of $500 received ten years from now discounted at a 4% rate is approximately $337.82.
Step-by-step explanation:
The student is asking about the calculation of the present value of $500 to be received ten years from now, with the amount being discounted at a 4% interest rate. To compute the present value, we would use the present value formula, which is:
PV = FV / (1 + r)^n
Where:
- PV is the present value
- FV is the future value ($500)
- r is the discount rate (0.04)
- n is the number of periods (ten years)
Thus, the calculation is:
PV = $500 / (1 + 0.04)^10
PV = $500 / (1.48024)
PV ≈ $337.82
The present value of $500 received ten years from now at a discount rate of 4% is approximately $337.82.