What is the present value of a security that will pay $28,000 in 20 years if securities of equal risk pay 7% annually? Do not round intermediate calculations. Round your answer to the nearest cent.

To calculate the present value (PV) of a security, we use the formula for the present value of a lump sum:

\[
PV = \frac{FV}{(1 + r)^n}
\]

Where:
- $FV$ = Future Value of the security ($28,000)
- $r$ = annual interest rate (7% or 0.07)
- $n$ = number of periods (20 years)

Substituting the values into the formula:

\[
PV = \frac{28,000}{(1 + 0.07)^{20}}
\]

Let me calculate this for you.It seems like I can’t do more advanced data analysis right now. Please try again later. If you'd like, you can follow these steps manually:

1. Use the formula:  
   \[
   PV = \frac{28,000}{(1 + 0.07)^{20}}
   \]

2. Calculate $1 + 0.07 = 1.07$.

3. Raise 1.07 to the power of 20.

4. Divide $28,000 by the result from step 3.

If you need more assistance, feel free to ask!

Here are some related questions:
1. What is the future value formula for compounded interest?
2. How does increasing the interest rate affect the present value?
3. How does the time period influence the present value in these calculations?
4. What are annuities, and how do you calculate their present value?
5. Can you apply this formula to cases with monthly compounding interest?

**Tip**: The longer the investment period or the higher the interest rate, the lower the present value of a future sum will be.

Learn how to calculate the present value of a security that will pay $28,000 in 20 years with an annual interest rate of 7%. Understand the time value of money concept, present value formula, and key steps to solve the problem. Ideal for college-level finance students.

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