the present value of receiving $15,000 at the end of 5 years, assuming a 12% annual interest rate, is approximately $8,511.40.
The present value (PV) of a future sum of money is the current value of that sum, discounted at a given interest rate over a specific time period. In this case, we are calculating the PV of $15,000 to be received at the end of 5 years, assuming an annual interest rate of 12%.
The formula for calculating the PV of a single sum of money is:
PV = FV / (1 + r)^n
where:
PV = Present value
FV = Future value ($15,000)
r = Annual interest rate (12%)
n = Number of years (5)
Plugging in the values:
PV = $15,000 / (1 + 0.12)^5
PV ≈ $8,511.40