An investment will pay you $43,000 in 10 years. If the appropriate discount rate

Question

An investment will pay you $43,000 in 10 years. If the appropriate discount rate is 7 percent compounded daily, what is the present value? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

An investment will pay you $43,000 in 10 years. If the appropriate discount rate is 7 percent compounded daily, what is the present value? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

The formula to calculate PV = FV / (1 + r)n

FV = $43,000

N = 3650 (Number of compounding periods)

I/Y = 0.02164% (Interest rate per period)

Solving for PV = $43,000 / (1.0002164)3650

PV = $21,354.60

I hope my solution solves your query.

Regards.

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