The present value of $5,000 to be received in 4 years at a market rate of interest of 6% compounded annually is $3,636.30.

a. True

b. False

The present value of the amount given can be found as follows;

A=p (1+r/100) ^n

A=amount=$5000

p=principle=?

r=6%

n=4 years

thus to calculate for p we we substitute the values in our formula;

5000=p (1+6/100) ^4

5000=p (1.06) ^4

hence;

p=5000 / (1.06) ^4

p=3,960.50

The answer is false