Tanya Williams, the chief executive officer of Willister Computers, believes that the firm is currently best equipped to enter t
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Answer:
$12,015 approx.
Explanation:
To calculate present value of a future amount, the future amount is discounted at the rate of interest for the period of investment, which reveals present value as on today. The technique is referred to as discounting technique.
Suppose P denote the amount invested today, which when matured after period of two years yields $13500. Following formula is used for calculating the money invested:
wherein, A = Amount
P = Principal
R = Rate of interest
n = number of years
13,500 = 1.1236 P
⇒ P = 12,015 Approx.
Thus, $12015 is required to be deposited today so as to yield $13,500 after 2 years compounded at 6% per annum rate of interest.