Respuesta :
According to the formula for present value, PV = FV/(1+i)n, present value is equal to future value divided by the sum of 1 plus the annual percentage rate of interest multiplied by the number of time periods.
What exactly are current value and future value?
The amount of money that needs be put into investments in order to accomplish a particular future goal is called the present value. The amount that will grow in value over time when a sum is invested is called future value. The amount of investment required to obtain the future worth is the present value.
Given that Shana Norris purchased $1,000 face value, five-year bonds with no coupon. 85 percent of opportunity cost is also mentioned. Next, determine the current market value of the bonds.
Given now, F.V = $1,000
N = 5
r = 8.5%
Present value for the price at the time being)
FV/ (1+R)ⁿ
1000 / (1+8.5%)ⁿ
1000/ (1.0850)5
1000/ 1.5037 = 665.0263
Price on the market right now: $665.0263≅$665
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