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Present Value of Amounts Due

Assume that you are going to receive $$210,000$ in $10$ years. The current market rate of interest is $11\%.$

a$.$ Using the present value of $$1$ table in Exhibit $5,$ determine the present value of this amount compounded annually. Round to the nearest whole dollar.

$fill in the blank $1$

b$.$ Why is the present value less than the $$210,000$ to be received in the future?

The present value is less due to

the compounding of interest

Correct

over the $10$ years.