The present value of $5,000 to be received in four years at a market rate of interest of 6% compounded annually is $3,636.30.

Question

Quizplus · Accepted Answer

The present value formula for compound interest is: PV = FV/(1+i)^n, where PV is the present value, FV is the future value, i is the interest rate, and n is the number of periods. Plugging in the given values, we get: 3,636.30 = 5,000/(1+0.06)^4. Solving for the future value, we get FV = $6,320.51. Therefore, the statement is false.

The Present Value of $5,000 to Be Received in Four