An investment will pay you $86,000 in three years. Assume the appropriate discou

Question

An investment will pay you $86,000 in three years. Assume the appropriate discount rate is 7.5 percent compounded daily.

What is the present value? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Use 365 days in a year. Round your answer to 2 decimal places (e.g., 32.16).)

What is the present value? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Use 365 days in a year. Round your answer to 2 decimal places (e.g., 32.16).)

Explanation / Answer

Present Value = Future Value /(1 +i)^n

where n is the time period = 3x365 compunded daily

n = 1095

i = discount rate = 0.075/365 = 0.0002

Future Value = 86000$

Prsesnt value = 86000/( 1+0.00020)^1095 = 86000/1.2522 = 68679.12 $

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