answer:
To compute the present value of an investment, we can use the formula for present value (PV):
PV = FV / (1 + r)^n
Where:
PV = Present value
FV = Future value
r = Interest rate
n = Number of years
In this case, the future value (FV) is $18,000, the interest rate (r) is 12%, and the number of years (n) is 13.
1. Let's calculate the present value:
PV = 18,000 / (1 + 0.12)^13
2. Simplifying the calculation:
PV = 18,000 / (1.12)^13
3. Evaluating the exponent:
PV = 18,000 / 2.936
PV ≈ $6,128.46
Therefore, the present value of the investment is approximately $6,128.46.
To draw the timeline:
- Start with a point labeled "Today" or "Time 0" on the left.
- Mark 13 equally spaced points to the right, each labeled with the respective year (1, 2, 3, ..., 13).
- Draw an arrow from the "Today" point to the year 13, representing the future value of $18,000.
- Draw an arrow from each year to the left, showing the flow of time.
- Label the arrow at year 0 with the present value of approximately $6,128.46.
This timeline visually represents the investment over the 13-year period, with the future value at year 13 and the present value at year 0.
Alli <3