Question

If money can be invested at 5.8% compounded quarterly, which is larger, $14,021 now or $25,000 in 10 years? Use present value to decide. The present value of $ in 10 years is $ . (Do not round until the final answer. Then round to the nearest cent as needed.)

Answer 1

solution: PV=FV/(1+i)^n Quarterly interest rate=5.8%/4 Quarterly period=10*4 PV=25000/(1.0145440) PV= 1.45% 40 FV Future value PV Present value i interest rate n number of years 14,055.88 $25000 in 10 years is larger.