Question

3) What is the present value of $1000, received at the end of 4 years of investment, with a discount rate of 4%?

Answer 1

3629.9

Step-by-step explanation:

I just did the test and thats what it told me the correct answer was.

Answer 2

$854.81

Step-by-step explanation:

The formula for calculating the present value is as below

PV = FV/( 1 + r)^n

Where Fv =1000

r = 4% or 0.04

n= 6

PV = $1000/ (1 + 4/100)^4

PV=$1000/(1 + 0.04)^4

PV=$1000/1.16985

PV =$854.81

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