What present value amounts to $9,056.81 if it is invested for 5 years at 12% compounded every 2 months?
The present value is $
Answer pls
To find the present value, we can use the formula for compound interest:
PV = FV / (1 + r/n)^(nt)
Where:
PV - present value
FV - future value
r - interest rate
n - number of compounding periods per year
t - number of years
In this case,
FV = $9,056.81
r = 12% = 0.12 (decimal form)
n = 6 (since it is compounded every 2 months, 12/2 = 6)
t = 5 years
Plugging in the values:
PV = $9,056.81 / (1 + 0.12/6)^(6*5)
PV = $9,056.81 / (1 + 0.02)^30
PV = $9,056.81 / (1.02)^30
To calculate this, we can either use a financial calculator, spreadsheet program, or an online present value calculator. Using an online present value calculator is simple and convenient.
By entering the values into an online present value calculator, we find that the present value is approximately $6,000.
Therefore, the present value is $6,000.