Question 28 2 points d A furniture store has a love seat on

Question 28 (2 points) d A furniture store has a love seat on sale for $699.00, with the payment due one year from today. The store is willing to discount the price at an annual rate of 5% if you pay today. What is the amount if you pay today? $665.71 $622.47 $608.21 $602.35

Solution

Answer 665.71

the present value of love seat = FV / ( 1 + i ) ^ n

i = 5 % future value = 699

= 699 / (1 + 0.05 ) ^ 1

= 665.71