How do you find the present value of the given future payment at the specified interest rate. $5000 due in two years at 9 1/2% compounded daily?

1 Answer
Jul 31, 2017

Answer:

Present value is # $ 4135.00 #

Explanation:

Future value is #F= $5000 # , Period is #t=2# years ,

Rate of interest #9.5%# compounded daily

#:. r= 9.5/(100*365) = 0.00026#

We know # F = P (1+r)^(2*365) # ; P is presen value

# :. P = F / ((1+r)^(2*365)) = 5000/(1.00026)^730 ~~ $ 4135.00#

Present value is # $ 4135.00 # [Ans]