Question

What is the present value on January 1, 2019, of $50,000 due on January 1, 2023,...

What is the present value on January 1, 2019, of $50,000 due on January 1, 2023, and discounted at 16% compounded quarterly?

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Answer #1

Correct answer---------26,695.41 or 26,695 or $26,700.......Depending upon roundoff requirements.

Working

Amount to be received (A) PV factor (B) Present value (A x B)
$      50,000.00 0.534 $      26,700.00

Alternate solution

Amount to be received (A) PV factor (B) Present value (A x B)
$      50,000.00 0.5339 $      26,695.00

PV factor is @4%. .

4% is 1/4th of 16%

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