You have an investment that will mature in 33 months and have a value of $4300. You need some quick cash and decide to sell today at a discount rate of 8.2% compounded quarterly. What is the cash value?
A) $4339.74
B) $3439.74
C) $3339.74
D) $3539.74
E) $3669.74

Question

Quizplus · Accepted Answer

Using the formula for present value of a future sum with quarterly compounding:
P = FV/(1+(r/n))^(n*t)
where P is the present value, FV is the future value, r is the discount rate, n is the number of compounding periods per year, and t is the time in years.
Substituting the given values:
P = 4300/(1+0.082/4)^(4*(33/12))
P = 3439.74
Therefore, the cash value is $3439.74.

You Have an Investment That Will Mature in 33 Months