Final answer:
The question relates to finding the present value of two future payments using the interest rate of 6.90%. The calculation involves using the present value formula for each payment and summing them to find the total value today. The interest rate must be expressed as a decimal in the calculations.
Step-by-step explanation:
The student's question involves calculating the present value of two future payments, which is a concept from the field of finance, specifically concerning the time value of money. The interest rate provided is 6.90%, and the goal is to determine what the sum of $5,900 received in the future would be worth today. This process requires the use of the present value formula, which is typically represented as PV = FV / (1 + i)^n, where PV is the present value, FV is the future value, i is the interest rate per period, and n is the number of periods.
To find the combined equivalent value today of the two future payments of $5,900 each, we would calculate the present value of each payment individually and then add them together. The first payment will be discounted for the period it is due, and the second payment will be discounted for its respective period. The sum of these calculations will give us the total present value of both payments. It's important to note that the formula used requires the interest rate to be expressed as a decimal (so 6.90% becomes 0.069) and periodic payments must be considered if they occur at different times.