Final answer:
To find the present value of a $5000 investment over 8 years at a 4% APR compounded daily, use the present value formula with future value, annual interest rate, times compounded per year, and number of years. The answer must be calculated with the given values.
Step-by-step explanation:
To calculate the present value of a lump sum investment that will be worth $5000 at the end of eight years with an annual percentage rate (APR) of 4% compounded daily, we use the present value formula:
Present Value = Future Value / (1 + r/n)nt
Where:
- Future Value = $5000
- r = annual interest rate (0.04 for 4%)
- n = number of times the interest is compounded per year (365 for daily)
- t = number of years (8)
Substituting the values:
Present Value = 5000 / (1 + 0.04/365)365*8 = 5000 / (1 + 0.000109589)2920.
Calculating this value gives you the present value, and from the given options, the correct answer must be calculated or looked up using a financial calculator or spreadsheet software capable of handling such equations.