Question

Find the present value of $300 due in the future under each of these conditions: 7% nominal rate, semiannual compounding, discounted back 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 7% nominal rate, quarterly compounding, discounted back 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 7% nominal rate, monthly compounding, discounted back 1 year. Do not round intermediate calculations. Round your answer to the nearest cent. $ Why do the differences in the PVs occur? -Select-

Answer 1

The differences in PV occur due to increase in compouding periods. As compounding periods increase, the equivalent rate also increase . This is will cause a decrease in the PV of the future cash flow.

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