Suppose you deposit $2,000 at the end of each quarter for five years at an interest rate (APR) of 8% compounded monthly. Which of the following formulas will determine the present worth value of your savings at the end of year 5? P = $2000(P/A,8%,5) P = $2000(P/A,8%,20) P= $2000(P/A,2.01%,5) P = $2000(P/A,2.01%,20)
Suppose you deposit $2,000 at the end of each quarter for five years at an interest rate (APR) of 8% compounded monthly. Which of the following formulas will determine the present worth value of your savings at the end of year 5? P = $2000(P/A,8%,5) P = $2000(P/A,8%,20) P= $2000(P/A,2.01%,5) P = $2000(P/A,2.01%,20)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Suppose you deposit $2,000 at the end of each quarter for five years at an interest
rate (APR) of 8% compounded monthly. Which of the following formulas will
determine the present worth value of your savings at the end of year 5?
✓P = $2000(P/A,8%,5)
P = $2000(P/A,8%,20)
P= $2000(P/A,2.01%,5)
P = $2000(P/A,2.01%,20)
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The present worth is a financial concept used to determine the value of an investment or a stream of future cash flows as of today's date. It takes into account the time value of money, which means that money available today is worth more than an equal amount in the future, because of the earning potential of the current funds.
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