dbrocker
1 Answer
MichaelHuss
In order to calculate present value of $500 due in 1 year at a discount rate of 6% one needs to use the General formula for finding the present value of future annual payments:
Present Value = P1/(1+r)1 + P2/(1+r)2 + ... +(F + Pn)/(1+r)n
Where 1, 2, ...n = number of years; r = discount rate; Pn = payment; F = face value (not relevant for this question).
Present Value = %500 = 500/(1+0.06)1= approximately %471.7
| 12 years ago. Rating: 1 | |
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