Present Worth of a Future Payment
Easytime value of moneypresent worth
What is the approximate present value of $5,000 received in 4 years at an annual discount rate of 6%?
- A$3,960
- B$4,200
- C$4,717
- D$5,300
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Answer: A. $3,960
Discount the future payment: P = F/(1 + i)ⁿ = $5,000/(1.06)⁴ = $3,960.47. The nearest choice is $3,960.
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