Determine the present value now of an investment of $3,000 made one year from now and an additional $3,000 made two years from now if the annual discount rate is 4 percent.
Please Calculate Using Excel thanks
ANS $ 5658.29
| FV = | Future Value | |
| PV = | Present Value | |
| r = | rate of interest | |
| n= | no of period | |
| A) INVESTMENT AT END OF YEAR 1 | FV = | PV (1 + r )n |
| 3000 = | PV*(1+4%)^1 | |
| 3000 = | 1.04* PV | |
| PV = | 3000 / 1.04 | |
| PV = | 2884.615385 | |
| B) INVESTMENT AT END OF YEAR 2 | FV = | PV (1 + r )n |
| 3000 = | PV*(1+4%)^2 | |
| 3000 = | 1.0816* PV | |
| PV = | 3000 / 1.0816 | |
| PV = | 2773.668639 | |
| TOTAL PRESENT VALUE = | 2884.62 + 2773.67 | |
| 5658.29 |
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