Register
What is the present discounted value of $10,000 that is to be received in 2 years if the market rate of interest is 4 percent? a. 0 percent. b. 8 percent.c. 12 percent.
79,417 views
35 votes
35 votes
What is the present discounted value of $10,000 that is to be received in 2 years if the market rate of interest is 4 percent?

a. 0 percent. b. 8 percent.c. 12 percent.

User Colin Moock
by
3.2k points

1 Answer

16 votes
16 votes

Answer:

PV = $9,245.56

Step-by-step explanation:

Giving the following information:

Future value (FV)= $10,000

Number of periods (n)= 2 years

Discount rate (i)= 4% = 0.04

To calculate the present value (PV), we need to use the following formula:

PV = FV / (1 + i)^n

PV = 10,000 / (1.04^2)

PV = $9,245.56

User Extreme
by
3.3k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

1.6m questions

2.0m answers

Other Questions

If the rate of inflation in Japan dramatically increases while the rate of inflation in the United States remains constant, then a. the demand curve for dollars shifts to the left. b. the demand curve
If you buy a one-year bond for $4,000 and the issuer pays you back $5,000 at the end of one year, the interest rate on the bond is
The market value of the equity of Hudgins, Inc., is $582,000. The balance sheet shows $21,000 in cash and $192,000 in debt, while the income statement has EBIT of $93,000 and a total of $137,000 in depreciation
Kylie is risk averse and has $1,000 with which to make a financial investment. She has three options. Option A is a risk-free government bond that pays 5 percent interest each year for two years. Option
From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that Group of answer choices bond interest is deductible for tax purposes. interest must be
Link Copied!