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- From: Business,
- Posted on: Sun 10 Mar, 2013
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Request Description

An investment will pay you $47,000 in 11 years. If the appropriate discount rate is 7.4 percent compounded daily, what is the present value? **(Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))**

Solution Description

Explanation:

We simply need to find the PV of a lump sum using the equation: |

PV = FV / (1 + r)^{t} |

It is important to note that compounding occurs daily. To account for this, we will divide the interest rate by 365 (the number of days in a year, ignoring leap year), and multiply the number of periods by 365. Doing so, we get: |