Questions: What amount of cash must be invested today in order to have 47,000 at the end of one year, assuming the rate of return is 7% (PV of 1 and PVA of 1) Note: Use appropriate factor(s) from the tables provided.

Solution Steps

To find the present value (PV) of a future amount, we use the formula for the present value of a single sum: $PV = \frac{FV}{(1 + r)^n}$, where $FV$ is the future value, $r$ is the rate of return, and $n$ is the number of periods. In this case, $FV = 47,000$, $r = 0.07$, and $n = 1$.

We are given the future value $FV = 47000$, the rate of return $r = 0.07$, and the number of periods $n = 1$.

To find the present value $PV$, we use the formula: $$PV = \frac{FV}{(1 + r)^n}$$

Substituting the known values into the formula: $$PV = \frac{47000}{(1 + 0.07)^1}$$

Calculating the denominator: $$1 + 0.07 = 1.07$$ Now substituting back: $$PV = \frac{47000}{1.07} \approx 43925.2336$$

Final Answer