You are considering an investment that will pay a lump sum of $50 000 at the end of six years and you decide that 9% per annum compounded monthly is an appropriate discount factor.What is the value of the investment in today's dollar terms?
A) $31 508.48
B) $32 496.57
C) $31 934.98
D) $47 846.89

Question

Quizplus · Accepted Answer

We can use the formula for present value of a lump sum:

PV = FV / (1 + i/n)^(n*t)

PV = 50,000 / (1 + 0.09/12)^(12*6)
PV = 31,934.98

Therefore, the value of the investment in today's dollars is $31,934.98.

You Are Considering an Investment That Will Pay a Lump