You purchased an investment that will pay $20,000 in 15 years. If the interest rate is...

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Question

business economics

Answer 1

Answer #1

Present value of investment can be calculated by dividing the future value of investment by the present value interest factor.

$PV = FV * \frac{1}{(1+r)^{n}}$

PV= 20,000 * [ 1 / (1+0.05)^15 ]

= 20,000 * 0.4810

= $9,620 approx

So, the correct option will be $9,620.34

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Answer 2

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