You are going to be given $45,000 in 7 years. Assuming an interest rate of 2.5%, what is the present value of this amount?
Assuming compound interestFV = PV(1+r/100)^nwhere, FV = Future value = $45,000PV = Present Value rate r = 2.5n = no, of terms = 7PV = 45000/(1+0.025)^7 = $ 37,856.94Assuming simple InterestFV = PV+ PV*r*n/100FV =PV(1+r*n/100)PV = FV/(1+r*n/100) = 45000/(1+7*2.5/100) = 45000(1+0.175) =38297.87Please select my answer as best if it was helpful to you.
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