Find the present value of the following future amount. $300,000 at 12% compounded semiannually for 15 years What is the present value? $ (Round to the appropriate cent.)
Find the present value of the following future amount. $300,000 at 12% compounded semiannually for 15 years What is the present value? $ (Round to the appropriate cent.)
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 5P
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Transcribed Image Text:Find the present value of the following future amount.
$300,000 at 12% compounded semiannually for 15 years
What is the present value?
(Round to the appropriate cent.)
Expert Solution
Step 1
Present Value refers to a concept that states the discounted value or say value at today's time of cash flows which were to receive in the future at some certain specified time period, at a given specified rate of discount. An inverse or say negative relationship exists between the discount rate and the present value. The higher the discount rate leads to a decrease in present value and the lower the discount rate, the present value tends to increase.
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