ind the present value of a payment §200 at the end of 5th year under theforce of interest 9.00% per annum.
Question
ind the present value of a payment §200 at the end of 5th year under theforce of interest 9.00% per annum.
Solution
To find the present value of a future payment, we use the formula for present value which is:
PV = FV / (1 + r)^n
where:
- PV is the present value
- FV is the future value
- r is the interest rate
- n is the number of periods
In this case, the future value (FV) is $200, the interest rate (r) is 9% or 0.09 (expressed as a decimal), and the number of periods (n) is 5 years.
So, substituting these values into the formula, we get:
PV = 200 / (1 + 0.09)^5
Now, calculate the denominator (1 + 0.09)^5 = 1.53862 approximately.
Then, divide the future value by this number:
PV = 200 / 1.53862 = $130.01 approximately.
So, the present value of a payment of 130.01.
Similar Questions
In what time will Rs.1,250, at 8% per annum, produce the same interest as Rs.2,000 does in 5 years at 0.5% simple interest?
A certificate of deposit is purchased for $3000 and held for 5 years. If the certificate earns 6% per annum, compounded quarterly, (four times per year) what is it worth at the end of the 5 years?
Mr. Kumar invests ₹15,000 in a bank account that offers a simple interest rate of 8% per annum. What will be the total amount after 5 years, including the principal?
The S.I. on a Sum of money will be Rs.600 after 10 years. If the Principal is tripled after 5 years, what will be the total interest at the end of 10th year?
What is the present value of an investment that pays you $1,200 in 5 years’ time where annual interest rates are 8% compounded annually?
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.