St. Mary's Church has a balloon payment of $100,000 due on its mortgage in two years. If the interest rate is 8 percent, the present value of St. Mary's balloon mortgage payment is

Question

Quizplus · Accepted Answer

The present value (PV) of a future payment can be calculated using the formula PV = FV / (1 + r)^n, where FV is the future value, r is the interest rate, and n is the number of periods. For a $100,000 payment due in two years at an 8% interest rate, the present value is $100,000 / (1 + 0.08)^2 = $85,733.88.

St Mary's Church Has a Balloon Payment of $100,000 Due