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1. Find the present value of $5000 to be received in 2 years if the money can be invested at 12%
interest rate compounded continuously.(1 Point)
$6272
O $6365.75
$6356.25

Respuesta :

The present value of $5000 to be received in 2 years at a 12% interest rate compounded continuously is $6356.25. This can be calculated by using the formula PV = FV/(1 + r)^t, where PV is the present value, FV is the future value, r is the interest rate, and t is the time period. Therefore, PV = 5000/(1 + 0.12)^2 = $6356.25.

mhanifa

Answer:

  • C) $6356.25

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Use the continuous compound equation:

  • A = Pe^(rt), where A  - future value, P - present value, r - annual interest rate, t - number of years

Substitute and calculate:

  • A = 5000*e^(0.12*2) = 6356.25 (rounded)

The matching choice is C.

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