Present value is $5543.07.
Given:
The future value is, FV = $6000.
The number of years is, t = 2 years.
Rate of interest is, r = 4%=0.04.
Componding term is semiannuallym n = 2.
The objective is to find the present value needed.
The formula to find the present value is,
[tex]PV=\frac{CV}{(1+\frac{r}{n})^{t+n}}[/tex]Now, substitute the given values in the above equation.
[tex]\begin{gathered} PV=\frac{6000}{(1+\frac{.04}{2})^{2+2}} \\ =\frac{6000}{(1+0.02)^4} \\ =\frac{6000}{(1.02)^4} \\ =5543.07 \end{gathered}[/tex]Hence, the present value to be determined is, $5543.07.
