Answer:
$537.78
Explanation:
According to given data:
Future Value = FV = $20,000
No. of years = n = 50 years
Discount Rate = n = 7.50%
Present value = PV = ?
Using Future value formula as below
Future value = Present value x ( 1 + rate of interest )^Number of years
FV = PV x [tex](1+r)^{n}[/tex]
PV = [tex]\frac{FV}{(1+r)^{n}}[/tex]
PV = FV x [tex](1+r)^{-n}[/tex]
PV = $20,000 x [tex](1+0.075)^{-50}[/tex]
PV = $537.78
So, the correct answer is $537.78.
