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Determining Present Value of Investments

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Investment A and B both have a future value of $5,000. and are exactly the same except that investment A matures in 5 years and investment B matures in 10 years. The present value of investment A will be _____ the present value of investment B.

Less than, the same as, greater than, or can't tell - please advise correct answer and show why/work - thanks so much.

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Solution Summary

This solution determines the present value of the investment.

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to calculate present values we need interest rates; assume that our interest rate is 10% for both A and B

For investment A

N= 5 I/YR= ...

Solution provided by:
Umut Oltulu, MBA
Education
  • BSc, Dokuz Eylul University
  • MBA, Texas A&M University-Kingsville
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