Question

Find the present value.

Answer 1

Ihave no cluser abt this 

Answer 2

Answer : $10,489.69

To find present value we use compound interest fromula

$FV=PV(1+ \frac{r}{n} )^{nt}$

where FV is the future value = 12300

PV is the present value

r is the rate of interest = 4% = $\frac{4}{100} = 0.04$

n is the number of times the interest is compounded per year .

For compounded quarterly we use n=4

t is the time ( years ) = 4

we replace all the values in our formula and solve for PV:

$FV=PV(1+ \frac{r}{n} )^{nt}$

$12300=PV(1+ \frac{0.04}{4} )^{(4)(4)}$

$12300=PV(1.01 )^{16}$

$PV=\frac{12300}{(1.01 )^{16}}$

PV=10489.70

Therefore , $10489.70 is the present value needed to have $12,300 after 4 years.