Question

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.

Answer 1

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