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$ 400.000 is to be received seven years from today. What is the PV of this cash flow if 12​% interest is compounded annually​?

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rvkacademic

Answer:

$180,939.69

Step-by-step explanation:

FV= Future Value = 400000

r = Rate of Interest as decimal = 12% / 100 = 0.12

t = number of years = 7

Formula for FV
FV = PV(1 + r)^t

Plugging in values
400,000 = PV (1 + 0.12)^7 = PV(1,12)^7

PV = 400,000/(1.12)^7

PV = $180,939.69

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