How much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?

$438.03

$461.08

$485.35

$510.89

$537.78

$537.78

Explanation:

In order to find the present value of a future payment we discount it using a discount rate. The formula for that is

Present value = Future value/(1+Rate)^Number of years.

In this case we know the future value is $20,000, the discount rate is 7.5% and the number of years are 50, so we just input these numbers in the formula to find the present value or worth today.

Present value = 20,000/(1+0.075)^50

=537.78

$20,000 due in 50 years would be worth $537.78 today if discounted by 7.5%

correct, but each time you dont pay the price of the penalty can increase.

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