Present Value, Future Value, and Compounding/Discounting

Business & Finance
Tutor: None Selected Time limit: 1 Day

The value at time 0 of $16,500 to be received in 5 years where the discount rate is 5 percent, compounded semiannually, is

Jul 22nd, 2015

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A=P(1+r/n)^nt (formula for compound interest)

.where A=final amount,P=present amount,R=discount rate and t=time in years

A=$16,500(1+0.05/2)^2*5

A=$16,500(1+0.025)^10

A=$16,500(1.025)^10

A=$16,500*1.2864

A=$21,226.2 , this is the final amount after 5 years

Please let me know if you need any clarification. I'm always happy to answer your questions.
Jul 22nd, 2015

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