Academic Calendars | Ac X-Chapter S Homework ipart 2) × ee Chegg Study l Guided
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Academic Calendars | Ac X-Chapter S Homework ipart 2) × ee Chegg Study l Guided Sour × ezt.mheducation.com/hm.tpx m ca Search S Most Visited Getting Started My USC Aiken- Black. The True Stary of Rac connect. Crystal Seller BADM 363 Business Finance: Fall 2017 (ALL SECTIONS) FINANCE Chapter 5 Homework (part 2) instructions I help Question 3 (017 Save & Exit || Submit 000 points Problem 5-18 Calculating Present Values [Lo 4] An investment will pay you $B5,000 in four years. Assume the appropriate discount rate is 7 25 percent compounded daily What is the present value? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Use 365 days in a year.) Present value References eBook&Resources; Worksheet Difficulty: 1 Basic Problem 5-18 Calculating Present Learning Objective: 05-04 Explain how interest Values [L0 4 rates are quoted (and misquoted) 249 PM 11/22/2017Explanation / Answer
Interest rate = 7.25% per annum, interest is compounded daily suppose there are 365 days in a year, daily interest rate will be = 7.25/365 = 0.019863% per day
= 1460 days
Present value is the present worth of cash that is to be received in the future, if future value is known, rate of interest in r and time is n then PV is
PV= FV/ (1 + r)^n
Where,
FV= 85000
r= 0.00019863
n= 1460
Let's put all the values in the formula
= 85000/ (1 + 0.00019863)^1460
= 85000/ (1.00019863)^1460
= 85000/ 1.33638873550885
= 63604.25
So PV of 85000 after 1460 years is = 63604.25
Present value is the present worth of cash that is to be received in the future, if future value is known, rate of interest in r and time is n then PV is
PV= FV/ (1 + r)^n
Where,
FV= 85000
r= 0.00019863
n= 1460
Let's put all the values in the formula
= 85000/ (1 + 0.00019863)^1460
= 85000/ (1.00019863)^1460
= 85000/ 1.33638873550885
= 63604.25
So PV of 85000 after 1460 years is = 63604.25