What's the present value of $1,325 discounted back 5 years if the appropriate interest rate is 6%, compounded monthly? Select the correct answer. a. $982.32 b. $994.62 c. $990.52 d. $986.42 e. $978.22
We use the formula:
A=P(1+r/12)^12n
where
A=future value
P=present value
r=rate of interest
n=time period.
1325=P*(1+0.06/12)^(12*5)
P=1325/(1+0.06/12)^(12*5)
=$1325*0.741372196
=$982.32(Approx).
What's the present value of $1,325 discounted back 5 years if the appropriate interest rate is...
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