If you deposit $500 from year 1 to year 5, $300 from year 6 to year...

If you deposit $500 from year 1 to year 5, $300 from year 6 to year 20, no deposits year 21 and year 22, and $700 in year 22. If the discount rate is 5%, what is the present value? Please show all steps

Expert Solution

We use the discounting technique to find the present value of the money to be received in future. Formula of PV is

PV= FV/ (1+ r)^n

where FV= future value

r= discounting rate

n= number of years for which discounting is done

PV can be calculated using two methods- one using the above formula and the other using the PV table from the internet.

jeff jeffy answered 1 year ago

5. You plan to deposit $500 into a bank account now (year 0), $300 in year...

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