QQuestionAccounting
QuestionAccounting
What is the present value of $45,000 to be received 50 years from today if the discount rate is 8 percent?
A. $1,147.07
B. $1,061.80
11 months agoReport content
Answer
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Step 1:I'll solve this present value problem step by step using the present value formula:
Step 2:: Identify the Present Value Formula
- $$n$$ = Number of Years
The present value (PV) formula is: Where:
Step 3:: Plug in the Known Values
- Number of Years ($$n$$) = 50
- Discount Rate (r) = 8% = 0.08
Step 4:: Calculate Present Value
PV = 45,000 \times \frac{1}{(1+0.08)^{50}}
Step 5:: Compute the Calculation
PV = 1,061.80
PV = 45,000 \times 0.0236
Final Answer
The present value of $45,000 to be received 50 years from today at an 8% discount rate is $1,061.80.
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