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wolverine [178]
3 years ago
5

What is the approximate present value of $1 that will be paid to you in 3 years if the interest rate were 5 percent?

Business
1 answer:
Stolb23 [73]3 years ago
3 0

Answer:

The present value is $0.86.-

Explanation:

Giving the following information:

Future Value (FV)= $1

Number of periods (n)= 3 years

Interest rate (i)= 5% = 0.05

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

PV= FV/(1+i)^n

PV= 1/(1.05^3)

PV= $0.8634

The present value is $0.86.-

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