Question

An investment will pay you $23,000 in 7 years. The appropriate discount rate is 10 percent...

An investment will pay you $23,000 in 7 years. The appropriate discount rate is 10 percent compounded daily. What is the present value?

Multiple Choice

  • $11,802.64

  • $11,993.68

  • $10,851.43

  • $11,765.23

  • $11,422.56
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Answer #1

Ans $11,422.56

FV = Future Value
PV = Present Value
r = rate of interest
n= no of period
PV = FV/ (1 + r )^n
PV = 23000 / ((1 + 10%/365)^2555)
PV = 11422.56
Where n = 7 years * 365 days = 2555
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