What is the Present Value of a Lump sum for $5,000, for 5 years, with 3 percent interest (round to the nearest cent){DO NOT INCLUDE COMMAS OR $}?

To calculate the Present Value (PV) of a lump sum, you can use the formula:

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

Where:
- $FV$ is the future value (in this case, 5000)
- $r$ is the interest rate per period (3% or 0.03)
- $n$ is the number of periods (5 years)

Substituting the given values:

\[
PV = \frac{5000}{(1 + 0.03)^5}
\]

Let me calculate that for you.The Present Value of a lump sum of 5000 for 5 years at a 3 percent interest rate is **4313.04**.

Do you need more details or have any questions?

Here are some related questions you might find useful:
1. How does increasing the interest rate affect the Present Value?
2. What happens to the Present Value if the period is extended to 10 years?
3. How do you calculate Present Value for multiple cash flows instead of a lump sum?
4. What is the formula for calculating Future Value from Present Value?
5. How would inflation affect the Present Value calculation?

**Tip:** A lower interest rate or a shorter time period results in a higher Present Value.

What is the Present Value of a Lump sum for $5,000, for 5 years, with 3 percent interest (round to the nearest cent)?

Learn how to calculate the Present Value of a lump sum of $5,000 over 5 years at a 3% interest rate. Understand key concepts in time value of money and how interest rates impact the present value. Suitable for Grades 10-12.

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