Question

Lisa Carson has the opportunity to receive $12,000 now or $15,000 in four years. If Lisa can earn 6 percent on her investments, what is the present value of the $15,000 payment?

Answer 1

$11881.4

Step-by-step explanation:

Given :

Future value, FV = $15,000

Interest rate, r = 6%

Period, n = 4 years

Using the Present Value formula :

PV = FV(1 ÷ (1 + r)^n)

15000(1 ÷ (1 + r)^n)

15000(1 ÷ (1 + 0.06)^4)

15000(1 ÷ 1.06^4)

15000(1 ÷ 1.26247696)

15000(0.7920936)

= $11,881.4