Calculate the present value of $1000 to be received at the end of 8years. Assume an interest payment rate of 5percent
1000(1.07)^-8
To calculate the present value of $1000 to be received at the end of 8 years with an interest rate of 5 percent, we can use the formula for present value of a future payment:
PV = FV / (1 + r)^n
Where PV is the present value, FV is the future value, r is the interest rate, and n is the number of periods.
Plugging in the values into the formula:
PV = $1000 / (1 + 0.05)^8
Simplifying this equation:
PV = $1000 / (1.05)^8
Calculating the present value using a calculator or spreadsheet software, we get:
PV ≈ $671.55
Therefore, the present value of $1000 to be received at the end of 8 years with an interest rate of 5 percent is approximately $671.55.
To calculate the present value of $1000 to be received at the end of 8 years with an interest rate of 5%, you can use the formula for present value (PV):
PV = FV / (1 + r)^n
Where:
PV = Present Value
FV = Future Value
r = Interest Rate
n = Number of periods
Plugging in the values we have:
FV = $1000
r = 5% or 0.05 (decimal form)
n = 8 years
PV = $1000 / (1 + 0.05)^8
Now, let's calculate the present value step by step:
1. Calculate 1 + r:
1 + 0.05 = 1.05
2. Raise 1.05 to the power of 8:
1.05^8 = 1.4693 (rounded to 4 decimal places)
3. Divide $1000 by 1.4693:
$1000 / 1.4693 = $681.17 (rounded to 2 decimal places)
Therefore, the present value of $1000 to be received at the end of 8 years, with an interest rate of 5%, is approximately $681.17.
just use the formula
PV = 1000(1.05)^-8
= ...