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Veseljchak [2.6K]
3 years ago
8

The value of Investment A at the end of year 5 is $20,000. Assuming that interest is compounded annually, and the interest rate

is 8%, what is the present value of this investment at the beginning of year 1
Business
1 answer:
mina [271]3 years ago
3 0

Answer:

PV= $13,611.66

Explanation:

Giving the following information:

Future Value (FV)= $20,000

Number of periods (n)= 5 years

Interest rate (i)= 8%

<u>To calculate the present value, we need to use the following formula:</u>

FV= PV*(1+i)^n

Isolating PV:

PV= FV/(1+i)^n

PV= 20,000 / (1.08^5)

PV= $13,611.66

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