Question

Oriole Company will receive $560000 in a future year. If the future receipt is discounted at an interest rate of 12%, its present value is $283713. In how many years is the $560000 received

Answer 1

It will take 6 years to receive the $560,000.

Step-by-step explanation:

Giving the following information:

FV= 560,000

PV= 283,713

Interes rate= 12%

To calculate the number of years, we need to use the following formula:

n= ln(FV/PV) / ln(1+i)

n= ln(560,000/283,713) / ln(1.12)

n= 6

It will take 6 years to receive the $560,000.