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  • 24-09-2020
  • Business
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39. You expect to receive $5,000 in 25 years. How much is it worth today if the discount rate is 5.5%?

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  • 26-09-2020

Answer:

PV= $1,311.17

Explanation:

Giving the following information:

Future Value (FV)= $5,000

Number of periods (n)= 25 years

Interest rate (i)= 5.5% compounded annually

To calculate the present value (PV), we need to use the following formula:

PV= FV / (1+i)^n

PV= 5,000 / 1.055^25

PV= $1,311.17

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