Find the present value of $20,000 due in 4 year(s) at the given rate of interest. Round your answer to the nearest dollar.
5% / year compounded monthly __________

8% / year compounded daily __________

A) $16,381, $14,523
B) $16,381, $24,418
C) $16,381, $27,542
D) $14,523, $24,418

Question

Find the present value of $20,000 due in 4 year(s) at the given rate of interest. Round your answer to the nearest dollar. ​
5% / year compounded monthly __________
​
8% / year compounded daily __________
​
A) $16,381, $14,523
B) $16,381, $24,418
C) $16,381, $27,542
D) $14,523, $24,418

Quizplus · Accepted Answer

To find the present value of $20,000 due in 4 years at a given interest rate, we use the formula for present value: $PV = \frac{FV}{(1 + r)^n}$, where $PV$ is the present value, $FV$ is the future value, $r$ is the interest rate per period, and $n$ is the total number of periods.1. For 5% per year compounded monthly, the monthly interest rate is $0.05/12$, and the number of periods is $4 \times 12 = 48$. Thus, $PV = \frac{20,000}{(1 + 0.05/12)^{48}}$, which calculates to approximately $16,381.2. For 8% per year compounded daily, the daily interest rate is $0.08/365$, and the number of periods is $4 \times 365 = 1460$. Thus, $PV = \frac{20,000}{(1 + 0.08/365)^{1460}}$, which calculates to approximately $14,523.Therefore, the correct answer is A) $16,381, $14,523.

Find the Present Value of $20,000 Due in 4 Year(s)