Question

Maria Addai has been offered a future payment of $990 two years from now. If she can earn 8.2 percent compounded annually on her investment, what should she pay for this investment today? (If you solve this problem with algebra round intermediate calculations to 4 decimal places, in all cases round your final answer to the nearest penny.)

Answer 1

845.63

Explanation:

hope it helps...

Answer 2

845.6306

Explanation:

Firstly this is annuity based

Let, investment at beginning of year = x

Then value at year 1 end = x + (8.2%
`*` x)

Value at end of year 2 = (x + 0.082x) + (8.2%
`*` (x + 0.082x))

Now this value = $990

Therefore,

990 = (x + 0.082x) + ((x + 0.082x)
`*` 8.2%)

990 = x + 0.082x + 0.082x + 0.006724x = 1.170724x

x = 990/1.170724 = 845.6306