An investment will pay you $95,000 in 10 years. If the appropriate discount rate is 9 percent compounded daily, what is the pres

Question

2 years ago

8

ent value

1 answer:

olga2289 [7] · Answer 1 · 2023-06-04T12:05:28+03:00

The present value of the investment future value is $38,628.40

What is present value?

Present value is the today's worth of a future amount when discounted or expressed in today's dollar equivalence.

The present value of a single future cash flow can be determined using the present value formula below:

PV=FV/(1+r/365)^(N*365)

PV=present value=unknown

FV=future value=$95,000

r=discount rate=9%

N=number of years before the future amount is received=10

365 is an indication of number of years in a year since discounted is compounded daily.

PV=$95,000/(1+9%/365)^(10*365)

PV=$38,628.40

The present value can be further understood using the link below:

#SPJ1