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Questions
FINA2720.MERGED.202610 Practice with Respondus and Time Value of Money- Requires Respondus LockDown Browser
Short answer
If the future value in one year is $7,524 and the discount rate is 0.035, what is the current price?
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Standard Answer
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Approach Analysis
We’re asked to find the current price (present value) given a future value of 7,524 one year from now and a discount rate of 3.5% (0.035).
First, identify the appropriate present value formula for annual discounting: PV = FV / (1 + r)^t. Here, FV = 7,524, r = 0.035, and t = 1 year,......Login to view full explanationLog in for full answers
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