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You are promised that when you retire from your current job, in 40 years' time, you...

You are promised that when you retire from your current job, in 40 years' time, you will receive a gold watch valued at $1 000. If you can invest money at 5% annual interest, what is the present worth of this promise?

Select one:

a. $142

b. $167

c. $211

d. $156

e. $231

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Answer #1

Answer

PV=FV*(1+i)^(-n)

PV=present value =?

FV=future value =1000

n=years=40

i=interest rate =5

PV=1000*(1.05^(-40))

=142.045682

=142

the amount is $142

option a

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