Question

you just won a prize and will recieve 5000 today plus 5000 a year from now. what is this prize woth to you today

Answer 1

Answer:

$9587.16

Step-by-step explanation:

We are given that

Today recieve prize=$5000

Recieve in a year from now=$5000

Total prize value=$5000+$5000=$10000

Consider

Rate of interest earn  annually on investment ,r=9%=0

Then , we have to find the value of prize worth today.

Present value=$Today\;prize\;value+Yearly\;prize\;value{1+r/100}$

Using the formula

Present value=$5000+5000{1+9/100}=5000+4587.16$

Present value=$9587.16