A bank offers to sell a bank note that will reach a maturity value of $15,000 in 9 years. How much should you pay for it now if you wish to receive an 8% return on your investment?
A) $1543.21
B) $7301.28
C) $13,800.00
D) $1533.33

Question

Quizplus · Accepted Answer

The present value of the bank note can be calculated using the formula PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the annual rate of return, and n is the number of years. So, PV = $15,000 / (1 + 0.08)^9 = $7,301.28. Therefore, you should pay $7,301.28 now if you wish to receive an 8% return on your investment. The answer is B.

A Bank Offers to Sell a Bank Note That Will