Question

The current price on a 46-inch flat panel LCD HD television is $2,300. Big screen HD television prices have dropped at an average rate of 9% per year in recent years. If you expect this trend to continue, how much will this style of television cost in three years?

Answer 1

$1,776.06

Step-by-step explanation:

The price of LED television after 3 years will be the equivalent of the current value of $2300 discounted at 9 % for 3 years.

The presented value will FV/(1+r)n

PV =$2300

r=9%

n=3 years

PV=$2300 / (1+9/100)3

=$2300 / (1 + 0.09)3

=$2300/1.2950

=$1,776.06