Question

What is the present value of $ 40,563 to be received exactly 31 years from today if the interest rate is 13 % p.a.? Round your answer to two decimal places and record without a dollar sign and without a comma. Your Answer: Answer

Answer 1

Solution:

We know the Present Value = Future Value / (1+ rate)^ no of periods.

We have Future value = 40563 , rate = 13% , number of periods = 31

Putting the values in the formula we get,

Present Value = 40563/ (1+13%)^31

= 40563 / (1.13)^31

= 40563 / 44.20096

= 917.694

The present value of 40563 at the end of 31 years when rate of interest is 13% is 917.69.