Asked by
Sarah Cadol
on Dec 02, 2024
Verified
A contract guarantees payment of $500 a month for the next 18 months starting today . How much is that contract worth today if the interest rate is 12% compounded monthly?
A) $8281.14
B) $8199.15
C) $9905.58
D) $9087.50
Compounded Monthly
A method of calculating interest where the interest earned is added to the principal each month, and the next month's interest is calculated on this new total.
Interest Rate
The proportion of a total amount of money that is levied for borrowing it, usually stated as an annual rate.
- Acquire knowledge about the concept of present value and its dependence on the fluctuations of interest rates and time intervals.
- Identify the differences in financial outcomes between beginning-of-period and end-of-period payments.
Verified Answer
DM
Learning Objectives
- Acquire knowledge about the concept of present value and its dependence on the fluctuations of interest rates and time intervals.
- Identify the differences in financial outcomes between beginning-of-period and end-of-period payments.