-Using only the information above,approximately how much would you pay today for an investment that pays $0 annual interest,but earns 8% interest over the next four years and has a face value at maturity of $13,500?

Question

Quizplus · Accepted Answer

To find the present value of the investment, we use the formula for the present value of a future sum: PV = FV / (1 + r)^n, where FV is the future value ($13,500), r is the interest rate (8% or 0.08), and n is the number of years (4). Calculating this gives PV = $13,500 / (1 + 0.08)^4 = $13,500 / 1.3605 ≈ $9,923. Therefore, approximately $10,000 is the closest choice.

-Using Only the Information Above,approximately How Much Would You Pay