What is the present value of $7,220 due 8 periods hence, discounted at 6%? (Round factor values to 5 decimal places, e. g. 1.25124 and final answer to 0 decimal places, e. g. 458,581.)

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Business

Zoe Riggs

6 November, 23:24

What is the present value of $7,220 due 8 periods hence, discounted at 6%? (Round factor values to 5 decimal places, e. g. 1.25124 and final answer to 0 decimal places, e. g. 458,581.)

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Answers (1)

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London Beard · Answer 1

Answer: $4,530 (0 d. p)

Explanation:

To solve this you can apply the Present Value formula of,

PV = A / (1+r) ^n

A = Amount

r = discount rate

n = no. Of periods

Slotting in the numbers we have,

PV = 7,220 / (1 + 0.06) ^ 8

= 4529.91732

= $4,530 (0 d. p)

$4,530 is the Present Value.