What's the present value of $16,000 discounted back 5 years if the appropriate interest rate is...

Question

Question

What's the present value of $16,000 discounted back 5 years if the appropriate interest rate is 4.5%, compounded semiannually?

Select the correct answer.

a. $10,295.04

b. $10,310.64

c. $10,287.24

d. $10,302.84

e. $10,318.44

business accounting

Answer 1

Answer #1

Correct option is d. $10302.84

n= 5 years* 2 = 10 semiannual periods

r = 4.5%

Amount = $16000

Present Value = Amount * Present value interest factor(r,n)

= $16000 * Present value Interest factor(4.5%,10)

= $16000 * 0.6439277

= $10302.84

Note: while calculate present value we assume that semiaanual interest rate is 4.5%.

Answer 2

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