The present value of $5,000 to be received in 4 years at a market rate of interest of 6% compounded annually is $3,636.30.
a. True
b. False

ANSWERS

2016-04-14 17:13:12

The present value of the amount given can be found as follows; A=p(1+r/100)^n A=amount=$5000 p=principle=? r=6% n=4 years thus to calculate for p we we substitute the values in our formula; 5000=p(1+6/100)^4 5000=p(1.06)^4 hence; p=5000/(1.06)^4 p=3,960.50 The answer is false

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