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3 years ago

Define present value.

Business

1 answer:

Igoryamba3 years ago

3 0

Answer:

The present value is the value today of a sum of money to be received in the future and in general is less than the future value.

Explanation:

The formula to compute the present value is shown below:

Future value = Present value × (1 + interest rate)^number of years

or Present value = Future value ÷ (1 + interest rate)^number of years

Let us take an example

Present value = $2,750

Rate = 5.25% ÷ 2 = 2.625%

Number of years = 1 year × 2 = 2 years

So, the future value

= $2,750 × (1 + 2.625%)^2

= $2,750 × 1.0531890625

= $2,896.27

It is done on semi annual basis. As we can see that the present value is less than the future value

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3 years ago

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Answer:

Correct Answer:

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3 years ago

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Answer:

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