Question

An investment will pay you $16,000 in 6 years. the appropriate discount rate is 10 percent compounded daily. What is the present value?

Answer 1

An investment will pay you $16,000 in 6 years. the appropriate discount rate is 10 percent compounded daily. The Present Value is $8,781.71.

Investment definition is an asset received or invested in to build wealth and store cash from the difficult earned profits or appreciation. investment which means is typically to obtain an additional source of earnings or benefit and take advantage of the investment over a particular time period.

In the most sincere sense, making an investment works while you purchase an asset at a low charge and sell it at a higher price. This kind of return for your investment is referred to as a capital advantage. earning returns through promoting a property for an income—or figuring out your capital gains—is one manner to make cash investing.

Investing is an effective manner to position your cash to work and probably construct wealth. smart making an investment may allow your money to outpace inflation and increase in price. The extra boom capability of investing is generally because of the strength of compounding and the danger-go-back tradeoff.

Present Value

Future Value = $16,000

Number of compounding periods (n) = 2,190 days [6 Years x 365 Days]

Interest rate (r) = 0.10/365 = 0.000273972602739726

Present Value = Future Value / (1 + r)^n

Present Value = $16,000 / (1 + 0.000273972602739726)^2190

Present Value = $16,000 / 1.82196907070351

Present Value = $8,781.71

Therefore, the Present Value is $8,781.71

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