In: Finance
What's the present value of $7,500 discounted back 5 years if the appropriate interest rate is 4.5%, compounded semiannually?
RATE = 4.5% Compounded semi annually
FV = 7500 , n = 5 years
we have to find present value
PV = FV/(1+r/m)^mn
PV = 7500/(1+ 0.045)^(2*5)
PV = 7500/(1+ 0.045)^10
PV = 7500/1.552969422 = 4829.46
Answer : 4829.46