Final answer:
The present value of an investment returning $15,000 in 5 years at an 18% annual rate is approximately $5,103.46.
Step-by-step explanation:
To determine the present value of an investment that returns $15,000 after 5 years with an annual rate of return of 18%, we can use the present value formula. The formula is PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the annual interest rate (expressed as a decimal), and n is the number of years.
We are given that FV = $15,000, r = 18% or 0.18, and n = 5 years. Plugging these values into the formula gives us:
PV = $15,000 / (1 + 0.18)^5
Now we calculate the present value:
PV = $15,000 / (1.18)^5
PV = $15,000 / 2.9382
PV = $5,103.46 approximately
So, the present value of the investment is approximately $5,103.46