Question

What is the value today of receiving $3,800 at the end of seven years, assuming an Interest rate of 8% compounded annually? Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (EV of $1 PV of $1. EVA of St and PVA of S

Multiple Choice
a) $2.617
b) $2.117
c) $1672
d) $2277

Answer 1

The present value of receiving $3,800 at the end of seven years, assuming an 8% interest rate compounded annually, is $2,213 when rounded to the nearest whole dollar.

Step-by-step explanation:

The question asks to calculate the present value of receiving $3,800 at the end of seven years with an interest rate of 8% compounded annually. To find the present value, you can use the present value formula which is:

Present Value = Future Value / (1 + interest rate)time

Applying this formula, the computation is as follows:

Present Value = $3,800 / (1 + 0.08)7 = $3,800 / (1.08)7 = $3,800 / 1.718848 = $2,212.55

The present value of $3,800 at the end of seven years at an 8% annual compound interest rate, rounded to the nearest whole dollar, is $2,213.