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16 November, 22:23

What is the present value of $500 due in 2 years at a discount rate of 3%.

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  1. 16 November, 22:50
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    P=present value

    F=future value=500

    n=number of years=2

    i=annual interest rate=3%

    We have

    F=P (1+i) ^n

    =>

    P=F / (1+i) ^n

    =500 / (1.03^2)

    = 471.30 to the nearest cent
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