What is the present equivalent of 18,000 to be received in 15 years when the interest rate is 7% per year?
N periods equal 15 years.
Interest rate I is 7% annually (compounding)
PV (present value) = -6,524.03
FV = + 18,000 in the future
Simple interest is equal to (18000*7*15)/100. = 18900
The maturity sum is therefore 18000 + 18900 = 36900.
PV = ?
N = 15 (periods)
Rate = 7%
FV = 18,000
PV ($6,524.03)
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