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
Problem 1PS
Related questions
Question
![What is the present value (PV) of $70,000 received six years from now, assuming the interest rate is 5% per year?
O A. $45,500
O B. $52,235
OC. $91,411
D. $44,400](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3966b9a7-fe71-44cf-b953-e8752bb97164%2F35787e1e-62c6-4612-9aa3-747b11a27c33%2F0fbdnox_processed.jpeg&w=3840&q=75)
Transcribed Image Text:What is the present value (PV) of $70,000 received six years from now, assuming the interest rate is 5% per year?
O A. $45,500
O B. $52,235
OC. $91,411
D. $44,400
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
Step 1
PV = FV / (1 + r / n)nt
Where,
- PV = Present value
- FV = Future value
- r = Rate of interest (percentage ÷ 100)
- n = Number of times the amount is compounding
- t = Time in years
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