Find the present value PV of the given investment (in dollars). (Round your answer to the nearest cent.)An investment earns 8% per year and is worth $30,000 after 7 years.PV = $
Question
Find the present value PV of the given investment (in dollars). (Round your answer to the nearest cent.)An investment earns 8% per year and is worth
Solution
To find the present value (PV) of the investment, we can use the formula for the present value of a future sum:
PV = FV / (1 + r)^n
where:
- FV is the future value of the investment, which is $30,000.
- r is the annual interest rate, which is 8% or 0.08.
- n is the number of years, which is 7.
Substituting these values into the formula, we get:
PV = $30,000 / (1 + 0.08)^7
Now, calculate the denominator:
(1 + 0.08)^7 = 1.718186
Then, divide the future value by this number:
PV = 17,454.59
So, the present value of the investment is approximately $17,454.59.
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