Question

▼ Cash Flow Present Discounted Value Interest Rate is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. The present value of a loan in which ​$5000 is to be paid out a year from today with the interest rate equal to 4​% is ​$ nothing. ​(Round your response to the neareast two decimal​ place) If a loan is paid after two​ years, and the amount ​$9000 is to be paid then with a corresponding 1​% interest​ rate, the present value of the loan is ​$ nothing. ​(Round your response to the neareast two decimal​ place)

Answer 1

Answer:

5000 in 1 year at 4% = $4,807.6923

9000 in 2 year at 1% =

Explanation:

We will calculate the present value of the loan at maturity

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 5000

time 1

rate 0.04

$\frac{5000}{(1 + 0.04)^{1} } = PV$

PV  $4,807.6923

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 9000

time 2

rate 0.01

$\frac{9000}{(1 + 0.01)^{2} } = PV$

PV  $8,822.6644