What is the present value of $7800.00 payable in six years if the current interest rate...
What is the present value of $7800.00 payable in six years if the current interest rate is 7.6% p.a., compounded quarterly? Round to nearest 100th.
Homework Answers
Answer
- Annual rate = 7.6%
- No of quarter in a year = 4
- Applicable rate = 7.6/4 = 1.90%
- Period = 6 years
- No. of quarters in 6 years = 6 x 4 = 24
- Present value factor at 1.90% for 24th period = [ 1/(1.019)24] = 0.636531036
- Present Value of $ 7800 = 7800 x 0.636531036 = $ 4964.94
- ANSWER rounded to 100th = $ 5,000
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