How do you find the present value of the given future payment at the specified interest rate. $5000 due in two years at 9 1/2% compounded daily?

1 Answer
Binayaka C.
Jul 31, 2017

Present value is $ 4135.00

Explanation:

Future value is F= $5000 , Period is t=2 years ,

Rate of interest 9.5% compounded daily

:. r= 9.5/(100*365) = 0.00026

We know F = P (1+r)^(2*365) ; P is presen value

:. P = F / ((1+r)^(2*365)) = 5000/(1.00026)^730 ~~ $ 4135.00

Present value is $ 4135.00 [Ans]

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