Find your Math Personality!
Find your Math Personality!
The present value of $1,000 to be received in 5 years is ________ if the discount rate is 12.78%.
Solution:
We have to calculate the present value
Present Value = Future value/ (1 + r)t
Where future value = $1,000
r is the rate = 12.78% = 0.1278
t is the time = 5 years
By substituting the values in the formula
PV = 1,000/ (1 + 0.1278)5
PV = 1,000/ (1.1278)5
By further calculation,
PV = 1,000/1,825
PV = $548
Therefore, the present value is $548.
The present value of $1,000 to be received in 5 years is ________ if the discount rate is 12.78%.
Summary:
The present value of $1,000 to be received in 5 years is $548 if the discount rate is 12.78%.
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