Answer :
To determine which amount is larger, [tex]$4955 now or $[/tex]7000 in 6 years, we can use the concept of present value. Present value helps us understand how much a future amount of money is worth in today's terms given a specific interest rate.
We're given the present value of [tex]$7000 in 6 years, calculated using a 5.9% interest rate compounded quarterly, is $[/tex]4922.67. Now, we want to compare this present value with the [tex]$4955 we have today.
Step-by-Step Comparison:
1. Identify Present Values:
- Present value of $[/tex]4955 now: [tex]$4955
- Present value of $[/tex]7000 in 6 years: [tex]$4922.67
2. Compare the Present Values:
- We need to compare $[/tex]4955 (which is the present value of the money we have right now) with [tex]$4922.67 (which is the present value of the $[/tex]7000 we will get in 6 years).
3. Determine Which is Larger:
- [tex]$4955 is greater than $[/tex]4922.67.
Therefore, [tex]$4955 now is larger than the present value of $[/tex]7000 in 6 years at the given interest rate.
We're given the present value of [tex]$7000 in 6 years, calculated using a 5.9% interest rate compounded quarterly, is $[/tex]4922.67. Now, we want to compare this present value with the [tex]$4955 we have today.
Step-by-Step Comparison:
1. Identify Present Values:
- Present value of $[/tex]4955 now: [tex]$4955
- Present value of $[/tex]7000 in 6 years: [tex]$4922.67
2. Compare the Present Values:
- We need to compare $[/tex]4955 (which is the present value of the money we have right now) with [tex]$4922.67 (which is the present value of the $[/tex]7000 we will get in 6 years).
3. Determine Which is Larger:
- [tex]$4955 is greater than $[/tex]4922.67.
Therefore, [tex]$4955 now is larger than the present value of $[/tex]7000 in 6 years at the given interest rate.