What's the present value of $11,500 discounted back 5 years if the appropriate interest rate is 4.5%,compounded semiannually?

Question

Quizplus · Accepted Answer

We use the formula PV = FV/(1+r/m)^(m*t) where PV is present value, FV is future value, r is the annual interest rate, m is the number of compounding periods per year, and t is the number of years. Plugging in the values, we get PV = 11,500/(1+(0.045/2))^(2*5) = $9,205.87. Therefore, the best choice is A.

What's the Present Value of $11,500 Discounted Back 5 Years