A person will receive 5000 six years from now. Present value at a compounded discount rate of 8% is:
To find the present value of receiving $5000 six years from now at a compounded discount rate of 8%, we can use the present value formula:
Present Value = Future Value / (1 + Discount Rate)^Number of Periods
Plugging in the given values:
Present Value = 5000 / (1 + 0.08)^6
Calculating the discounted present value:
Present Value = 5000 / (1.08)^6
Present Value = 5000 / 1.593848
Present Value ≈ 3134.66
Therefore, the present value of receiving $5000 six years from now at a compounded discount rate of 8% is approximately $3134.66.
To calculate the present value of $5000 received six years from now at a compounded discount rate of 8%, we can use the formula for present value:
Present Value = Future Value / (1 + Discount Rate)^n
Where:
- Future Value is the amount received in the future ($5000 in this case)
- Discount Rate is the compounded discount rate (8% or 0.08)
- n is the number of periods (6 years in this case)
Now we can substitute the values into the formula:
Present Value = 5000 / (1 + 0.08)^6
To simplify the calculation further:
Present Value = 5000 / (1.08)^6
Next, we can solve:
Present Value = 5000 / (1.586874)
Finally, we can calculate the present value:
Present Value ≈ $3,154.66
So, the present value of $5000 received six years from now at a compounded discount rate of 8% is approximately $3,154.66.