Question

An investment will pay you $80,000 in 10 years. If the appropriate discount rate is 9 percent compounded daily, what is the present value? (Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

PV= $32,125.20

Step-by-step explanation:

Giving the following information:

Future Value= $80,000

Number of periods= 10*365= 3,650

Interest rate= 0.09/365= 0.00025

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

PV= FV/(1+i)^n

PV= 80,000 / (1.00025^3,650)

PV= $32,125.20