Problema Solution
What is the present value of $3,500 per year for 8 years discounted back to the present at 9 percent?
Answer provided by our tutors
Let
P = the present value
t = 8 years
r = 0.09 or 9% annual rate
A = $3,500 the future value
A = P(1 + r)^t
P = A/(1 + r)^t
P = 3500/(1 + 0.09)^8
........
........
P = $1,756.53
The present value is $1,756.53.