Question

What is the present value of the following? $8,000 in 13 years at 8 percent? $18,000 in 7 years at 9 percent? $27,800 in 18 years at 10 percent?

Answer 1

The Present Value is calculated by using the following formula

Present Value = Future Value / (1 + r)ⁿ

Where, “r” is the Interest Rate and “n” is the number of periods

Present Value of 8,000 in 13 years at 8 percent

Present Value = Future Value / (1 + r)n

= $8,000 / (1 + 0.08)¹³

= $8,000 / 2.71962

= $2,941.58

Present Value of $18,000 in 7 years at 9 percent

Present Value = Future Value / (1 + r)n

= $18,000 / (1 + 0.09)⁷

= $18,000 / 1.82804

= $9,846.62

Present Value of $27,800 in 18 years at 10 percent

Present Value = Future Value / (1 + r)n

= $27,800 / (1 + 0.10)¹⁸

= $27,800 / 5.55992

= $5,000.07