The annual interest rate is 6%. Part 1 What is the present value (PV) of $1,000...

 

 

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The annual interest rate is 6%. Part 1 What is the present value (PV) of $1,000 that you'll receive in 8 years? 627.41 PV Correct FVN (1 + I) N 1,000 (1 +0.06)8 627.41 Dividing the future value by (1+1)N is called discounting, and it is used to adjust for the time value of money: it's always better to receive a cash flow earlier rather than later, because we can then invest the amount and earn interest on it. Inputs Compute Similarly, it's always better to make a payment later rather than earlier, because we could invest the amount in the meantime and earn interest on it. Using a financial calculator: N I/Y PV 86 Attempt 1/5 for 10 pts. 627.41 PMT FV 0 Using Excel (do not enter the thousands separators): =PV(rate, nper, pmt, fv) =PV(0.06, 8, 0, -1,000) =627.41 -1,000 The annual interest rate is 6%. Part 1 What is the present value (PV) of $1,000 that you'll receive in 8 years? 627.41 PV Correct FVN (1 + I) N 1,000 (1 +0.06)8 627.41 Dividing the future value by (1+1)N is called discounting, and it is used to adjust for the time value of money: it's always better to receive a cash flow earlier rather than later, because we can then invest the amount and earn interest on it. Inputs Compute Similarly, it's always better to make a payment later rather than earlier, because we could invest the amount in the meantime and earn interest on it. Using a financial calculator: N I/Y PV 86 Attempt 1/5 for 10 pts. 627.41 PMT FV 0 Using Excel (do not enter the thousands separators): =PV(rate, nper, pmt, fv) =PV(0.06, 8, 0, -1,000) =627.41 -1,000

Answer rating: 100% (QA)

part 1 Lets recalculate the present value using the correct formula PV FV 1 rn In this case FV 1000 ... View the full answer