Find the present value of 9000 due at the end of 18years at 11%per year compounded monthly
To find the present value of a future amount, we need to use the formula for present value of a future amount:
PV = FV / (1 + r/n)^(n*t)
Where:
PV = Present Value
FV = Future Value
r = Interest rate per period
n = Number of compounding periods per year
t = Number of years
In this case, we have:
FV = $9,000
r = 11% per year (which is equivalent to 0.11)
n = 12 (monthly compounding)
t = 18 years
Substituting these values into the formula, we get:
PV = 9000 / (1 + 0.11/12)^(12*18)
Now, let's calculate the present value.
PV = 9000 / (1 + 0.009166667)^(216)
PV = 9000 / (1.009166667)^(216)
PV = 9000 / (3.1724824)
PV = $2,835.71 (rounded to the nearest cent)
Therefore, the present value of $9,000 due at the end of 18 years at an interest rate of 11% compounded monthly is approximately $2,835.71.