Answer:
a. $16,509.434
b. $15,574.94
Explanation:
The computation of the present value in each case is as followS:
As we know that
Present Value = Future Value ÷ (1+ rate of interest)^number of years
a. AFter one year
= $17,500 ÷ (1 + 0.06)^1
= $16,509.434
b. After 2 years
= $17,500 ÷ (1 + 0.06)^2
= $17,500 ÷ 1.1236
= $15,574.94
Hence, the present value after one year and 2 years is $16,509.434 and $15,574.94 respectively
