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The problem in the image asks to compute the present value (PV) of an investment using either Equation 5-3 or a Present Value Interest Factor (PVIF) table. The given details are:

- Future value (FV): ₱18,000
- Time (t): 2 years
- Interest rate (r): 6% annually

To calculate the present value, you can use the formula for the present value of a lump sum:

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

Where:
- \(FV\) is the future value (₱18,000),
- \(r\) is the annual interest rate (6% or 0.06),
- \(t\) is the time period (2 years).

Now, let's compute the present value:

\[
PV = \frac{18,000}{(1 + 0.06)^2}
   = \frac{18,000}{(1.06)^2}
   = \frac{18,000}{1.1236}
   \approx ₱16,022.86
\]

Thus, the present value of the investment is approximately **₱16,022.86**.

Would you like further details or have any questions?

Here are 5 related questions:
1. How would the present value change if the interest rate were higher, say 8%?
2. What is the future value if you invest ₱16,022.86 today for 2 years at 6% interest?
3. How does the length of the investment period affect the present value of a future amount?
4. Can this same formula be applied to monthly compounded interest? How would it change?
5. What happens to the present value if the future value is expected after 5 years instead of 2 years?

**Tip:** The higher the interest rate or the longer the time period, the lower the present value of a future amount.

Compute for the present value of ₱18,000 in two years' time after investing in fixed income securities that yield 6% annually.

Learn how to calculate the present value of ₱18,000 to be received in two years, using a 6% interest rate. This problem applies the Present Value formula and explores the concept of time value of money, suitable for finance students.

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