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    paranee's Avatar
    paranee Posts: 5, Reputation: 1
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    #1

    Nov 5, 2010, 08:34 PM
    Present value
    What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?
    kofigc's Avatar
    kofigc Posts: 21, Reputation: 1
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    #2

    Nov 8, 2010, 06:08 AM
    Assuming that we are looking to calculate the amount of money to be invested now to achieve the stated outcome in 20 years:

    At = A0 * (1+r/100m)^mt

    For your question, At= 5000, A0=?? r = 7%, m = 1 (this is the number of times interest is paid per annum) and t = 20.

    Replace those values in to the equation above and you should get the answer, good luck!
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