Question

Problem 5-5 Present Value (LG5-3) Compute the present value of a $2,800 deposit in year 3, and another $2,300 deposit at the end of year 5 if interest rates are 8 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Answer 1

Answer:

$3788.07

Explanation:

Present value=$2,800

Another year =$2,300

The Present value can be determined by the following formula

=$flows\ of\ cash\ * discounting\ factor\ of\ present \ value$

$=\frac{=2800}{1.08^{3} } +\frac{2300}{1.08^{3} }$

=$3788.07