Question: Present value with compound interest: (a) What is the present value of $5000 due in five years at an annually compounded rate of 6.33 per

Present value with compound interest:

(a) What is the present value of $5000 due in five years at an annually compounded rate of 6.33 per cent per annum?

(b) Calculate the present value of $7000, due in three years at 5.40 per cent per annum compounded quarterly.

(c) Calculate the present value of $7000, due in three years at 5.40 per cent per annum, compounded monthly.

(d) Compare the answers in

(b) and

(c) above and explain the difference in the present value amounts. (LO 8.2)

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