Asked by Eloisa
Present Value
suppose your bank account will be worth $7000 in one year. The interest rate (discount rate) that the bank pays is 8%. What is the present value of your bank account today? What would the present value of the account be if the discount rate is only 3%
suppose your bank account will be worth $7000 in one year. The interest rate (discount rate) that the bank pays is 8%. What is the present value of your bank account today? What would the present value of the account be if the discount rate is only 3%
Answers
Answered by
drwls
For the first part of your question,let X be the present value. Then solve
1.08X = 7000
for X
For the second part, solve
1.03X = 7000
1.08X = 7000
for X
For the second part, solve
1.03X = 7000
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