Ask Question
10 May, 00:40

Assume the real rate of interest is 3.00% and the inflation rate is 6.00%. What is the value today of receiving 14,488.00 in 13.00 years?

+1
Answers (1)
  1. 10 May, 03:14
    0
    Present Value = $15,874.25

    Explanation:

    Giving the following information:

    Assume the real rate of interest is 3.00% and the inflation rate is 6.00%. What is the value today of receiving 14,488.00 in 13.00 years?

    This is a rare case where the interest rate is negative:

    Interest rate = 0.03 - 0.06 = - 0.03

    Having said this, the present value is higher than the final value:

    PV = FV / (1+i) ^n

    PV = 14,488 / 0.97^3 = $15,874.25
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Assume the real rate of interest is 3.00% and the inflation rate is 6.00%. What is the value today of receiving 14,488.00 in 13.00 years? ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers