Find the present value of the future value.
-$2000, invested for 9 years at 5% compounded monthly
A) $3088.69
B) $1276.45
C) $1321.45
D) $3133.69

Question

Quizplus · Accepted Answer

The present value $PV$ of a future amount $FV$ can be calculated using the formula $PV = \frac{FV}{(1 + \frac{r}{n})^{nt}}$, where $r$ is the annual interest rate, $n$ is the number of compounding periods per year, and $t$ is the time in years. For this problem, $FV = $2000$, $r = 0.05$, $n = 12$, and $t = 9$. Plugging these values into the formula gives $PV = \frac{2000}{(1 + \frac{0.05}{12})^{12*9}} \approx $1276.45$.

Find the Present Value of the Future Value