EX 4.2:

What is the present value of $2,200 due in 12 years at a 6 percent interest rate and 11 percent interest rate? Do not round intermediate calculations. Round your answers to the nearest cent.

Present value at 6%: $

Present value at 11%: $

Explain why the present value is lower when the interest rate is higher.

1. The less interest you can earn during an investment period, the less you need to invest today to receive a particular amount in the future.
2. The more interest you can earn during an investment period, the less you need to invest today to receive a particular amount in the future.
3. The more interest you can earn during an investment period, the more you need to invest today to receive a particular amount in the futu