Present Value of Amounts Due

Assume that you are going to receive $$360,000$ in $10$ years. The current market rate of interest is $5\%.$

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.

b$.$ Why is the present value less than the $$360,000$ to be received in the future?

The present value is less due to the compounding of interest $$ over the $10$ years.