If the market rate of interest is 11 percent, what is the present discounted value of...
If the market rate of interest is 11 percent, what is the present discounted value of $1,000 that will be paid in Instructions: Round your responses to two decimal places.
a. 1 year? $
b. 5 years? $
c. 10 years? $
Homework Answers
Answer
a)
PV=FV*(1+i)^(-n)
FV=future value
i=interest rate
n=years
PV=1000*(1.11^-1)
=900.900901
=900.90
the value is $900.90
===========
b)
PV=1000*(1.11^-5)
=593.451328
=593.45
the value is $593.45
========
c)
PV=1000*(1.11^-10)
=352.184479
=352.184
The value is $352.18
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