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Present Value of a Lump Sum What is the present value of a $10,000 prize you expect to receive in 9 years? You require an 8 percent discount rate Write your answer out to two decimal places. (Note: Use the present value of an lump sum table in the Exhibit 1-3.) (Round yo answer to the nearest dollar amount.) ount per payment
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Answer #1

Amount = Principal*(1 + r)t

$10000 = Principal*(1 + 0.08)9

$10000 = Principal*(1.08)9

Principal = $10000/(1.08)9

Principal = $5002.48

Therefore, present value of a $10000 prize in 9 years is $5002.48

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