Calculate the present value of a payment of $27,500 payable in 10 years if money is worth 9% compounded semi-annually.
A) $29,723.88
B) $11,616.30
C) $11,402.68
D) $9,725.39
E) $8,899.11

Question

Quizplus · Accepted Answer

The present value is calculated using the formula PV = FV / (1 + r/n)^(nt), where FV is the future value, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years. Here, FV = $27,500, r = 0.09, n = 2, and t = 10. Plugging in these values gives PV = $27,500 / (1 + 0.09/2)^(2*10) = $11,402.68.

Calculate the Present Value of a Payment of $27,500 Payable