What is the present value (PV) of an investment that will pay $2,500 in five years if

Question:

What is the present value (PV) of an investment that will pay $2,500 in five years if the opportunity cost rate is 9 percent compounded

(a) Annually,

(b) Quarterly,

Explain why the PV is lowest when interest is compounded monthly.

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...

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