Final answer:
The present value of $80,000 due in 6 years at different interest rates is $62,438.07 for 6% compounded monthly and $61,707.19 for 7% compounded daily.
Step-by-step explanation:
To find the present value of $80,000 due in 6 years at different interest rates, we can use the present value formula:
Present Value = Future Value / (1 + Interest Rate / Frequency)^(Time * Frequency)
To find the present value (PV) of a future amount, you can use the present value formula:
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PV=
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where:
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FV is the future value (in this case, $80,000),
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r is the annual interest rate (as a decimal),
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n is the number of times interest is compounded per year, and
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t is the number of years.
(a) For 6% interest rate compounded monthly:
Present Value = $80,000 / (1 + 0.06/12)^(6 * 12) = $62,438.07
(b) For 7% interest rate compounded daily:
Present Value = $80,000 / (1 + 0.07/365)^(6 * 365) = $61,707.19