Final answer:
The present value of $1,000 to be paid in 9 years at an effective interest rate of 6.1% is approximately $591.89, calculated using the present value formula and the given interest rate and time.
Step-by-step explanation:
To calculate the present value of $1,000 to be paid in 9 years with an effective rate of interest of 6.1%, we use the present value formula:
Present Value = Future Value / (1 + r)^n
Where:
- Future Value is the amount to be paid in the future, which is $1,000.
- r is the effective annual interest rate (expressed as a decimal), which is 0.061 for 6.1%.
- n is the number of years until the payment, which is 9.
Plugging in the values we get:
Present Value = $1,000 / (1 + 0.061)^9
The present value calculation yields:
Present Value = $1,000 / (1.061)^9
Present Value = $1,000 / 1.689479
Present Value = $591.89
Therefore, the present value of $1,000 to be received in 9 years with a 6.1% effective interest rate is approximately $591.89.