Asked by Alexis
What is the present value of an investment that will be worth $2000 at the end of five years? Assume an APR (Annual Percentage Rate) of 6% compounded monthly.
The present value is $_____ .
The present value is $_____ .
Answers
Answered by
Henry
P = Po(1+r)^n = 2000
r = (6%/12)/100% = 0.005
n = 12comp/yr. * 5yrs. = 60 compounding
periods.
Po(1.005)^60 = 2000
Po = 2000/(1.005^60) = $1482.74=Initial
deposit or present value.
r = (6%/12)/100% = 0.005
n = 12comp/yr. * 5yrs. = 60 compounding
periods.
Po(1.005)^60 = 2000
Po = 2000/(1.005^60) = $1482.74=Initial
deposit or present value.
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