Question

What is the present value of $7,220 due 8 periods hence, discounted at 6%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Answer 1

Answer: $4,530 (0 d.p)

Step-by-step explanation:

To solve this you can apply the Present Value formula of,

PV = A / (1+r)^n

A = Amount

r = discount rate

n = no. Of periods

Slotting in the numbers we have,

PV = 7,220 / ( 1 + 0.06) ^ 8

= 4529.91732

= $4,530 (0 d.p)

$4,530 is the Present Value.