What is present value of $20,000 at 7% compounded monthly for 3 years. a. $1,750.71 b. $16,221.58 c. $19,654.04 d. $24,658.51

Answer option D. >>>>>>>>>>>>> $24,658.51

The monthly interest is7%/12 =0.583333% (0.0058333)

The discount factor for36 months is1 / ((1.0058333)^36

So the answer is B

(Are you sure that the question is for present value? Because the way it is worded otherwise makes it sound like the terminal value, which would mean multiplying by (1.0058333)^36 and would then give the answer D)

B.

P.V = F.V / (1+i)^n

= (1+(0.07/12)^(3*12)

=16221.6

Monthly Compounding:7 % Divided By12 =  0.0058 

So, according to Formula - 

 =20,000 (1.0058)^12*3

 =24,658.51 is the Correct Ans

 

 

use the equation A=P(1+i)^n to calculate simple compound interest. p=20000i=0.07/12 months in a year  n=3x12 months in a year A=20000(1+(.07/12))^36 A=$24,658 The answer is d.)