Question

Calculate the present value PV of an investment that will be worth $1,000 at the stated interest rate after the stated amount of time. 7 years, at 3% per year, compounded annually.

Answer 1

PV= $813.09

Explanation:

Giving the following information:

Future Value (FV)= $1,000

Number of periods (n)= 7 years

Interest rate (i)= 3% compounded annually

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

PV= FV/(1+i)^n

PV= 1,000 / (1.03^7)

PV= $813.09