Question

Suppose you want to realize a future value of $150,000 in 30 years on an investment you make. The average annual rate of return is 8.75%. What will be the present value of your investment? A. $163,125 B. $1,857,673 C. $12,112 D. $150,000

Answer 1

Answer:

PV= $12,111.93 = $12,112

Explanation:

Giving the following information:

Future Value (FV)= $150,000

Interest rate (i)= 8.75% = 0.0875

Number of periods (n)= 30

To calculate the present value (PV), we need to use the following formula:

PV= FV/(1+i)^n

PV= 150,000 / (1.0875^30)

PV= $12,111.93