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21 April, 02:32

What is the present value of $100 to be deposited today into an account paying 8.0%, compounded semi-annually for two years?

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  1. 21 April, 04:38
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    The Answer is that the present value of $100 is $100.

    Because this $100 dollar is deposited today so the time is equal to zero and when time is zero the value of amount is the value of amount itself.

    As the account is paying 8% compounded semi annually for two years but that does not have any effect on the $100 you are depositing today.

    If the question is in such a way that they asked for the present value of $100 that was deposited two years ago than we calculate.
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