Present Value of Amounts Due

Assume that you are going to receive $660,000 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.

$___________

1 b. Why is the present value less than the $660,000 to be received in the future? The present value is less due to __( deflation, inflation, the compounding of interest)__ over the 10 years.