Answer to Question #265606 in Financial Math for shehan mendis

Question

Find the present value of $300 due in six years’ time at 8% p.a. compounded annually. 

Answer 1

PV=FV/[(1+r)^t

pv-present value of the investment

fv refers to the future value of the investment

r-rate

t-time in years

PV-?

FV-$300

r-8%-0.8

n-6

PV=300/[(1+0.8)⁶]

PV=300/(1.08)⁶

PV=300/1.5869

PV=189.05

THE PRESENT VALUE OF THE INVESTMEN IS $189.05