Question

Compute the present value of a $100 investment made 6 months, 5 years, and 10 years from now at 4 percent interest. Instructions: Enter your responses rounded to the nearest penny (two decimal places). Present value of investment made in 6 months at 4 percent

Answer 1

Answer:

Present value investment = $98.05

Explanation:

given data

present value = $100

time 1 = 6 months = $\frac{6}{12}$  = 0.5 year

time 2 = 5 years

time 3 = 10 years

interest rate = 4 % = 0.04

to find out

Present value investment in 6 month for the rate  4 percent

solution

we get here Present value investment by as

Present value investment = present value ÷ $(1+r)^{t}$ ..............1

put here value and we get

Present value investment = $\frac{100}{(1+0.04)^{0.5}}$    

solve it we get

Present value investment = $\frac{100}{1.0198}$

Present value investment = $98.05