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rodikova [14]
3 years ago
11

What is the present value of a security that will pay $34,000 in 20 years if securities of equal risk pay 8% annually? Round you

r answer to the nearest cent.
Business
1 answer:
OLga [1]3 years ago
4 0

Answer:

present value = $7296.14

Explanation:

given data

future value =  $34,000

time t = 20 year

rate r = 8% = 0.08

solution

we apply here future value formula for get present value that is

future value = present value × (1+r)^{t}    .....................1

put her value and we get

$34,000 = present value ×  (1+0.08)^{20}

present value = \frac{34000}{1.08^{20}}

present value = \frac{34000}{4.660}

present value = $7296.14

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