Question

What is the present value of a $2,000 payment made in five years when the discount rate is 9 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

PV= $1,299.86

Step-by-step explanation:

Giving the following information:

Future Value ( FV)= $2,000

Number of periods (n)= five years

Discount rate (i)= 9% = 0.09

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

PV= FV/(1+i)^n

PV= 2,000 / (1.09^5)

PV= $1,299.86