Question

You are considering investing in a seculty that will pay you $5,000 in 28 years a. If the appropiate discount rate is 9 percent, what is the present value of thits investment? a. If the appropiate discoumt rate is 9 percent, the present vabue of this imvestment is : (Round to the bearest cent) b. Assume these investments sell for $1,259 in retuen for which you recetwe $5,900 in 28 years. What is the rate of return investors earn on this invostment if they buy t for 51,259 ?

Answer 1

To calculate the present value of an investment with a future value of $5,000 after 28 years at a discount rate of 9%, we use the formula PV = FV/(1+r)^n. Plugging in the values, the present value is approximately $1046.57.

Step-by-step explanation:

To calculate the present value of an investment, we use the formula: PV = FV/(1+r)^n, where PV is the present value, FV is the future value, r is the discount rate, and n is the number of periods.

In this case, the future value is $5,000, the discount rate is 9%, and the number of periods is 28 years. Plugging these values into the formula, we get:

PV = 5000/(1+0.09)^28 = $1046.57

Therefore, the present value of the investment is approximately $1046.57.