Using only the information in the table below,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? Present Value Factor for Reversion of $1

Question

Quizplus · Accepted Answer

To calculate the present value of the investment, we need to use the present value factor for reversion of $1 over four years at 8%, which is 0.735.

Present value = Face value / (1 + interest rate)^years * present value factor 
Present value = 13500 / (1 + 0.08)^4 * 0.735 
Present value ≈ $10,000

Using Only the Information in the Table Below,approximately How Much