How much money would you have to deposit today in order to have $5,000 in three years if the discount rate is 6 percent per year? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e. g., 32.16))

$4,198.10

Explanation:

Compounding and discounting are the methods used to determine the present and future value of money.

Compounding shows the Future value of an amount today while discounting shows the present value of a future amount.

Fv = Pv ( 1 + r )^n

where

Fv = Future value

Pv = Present value

r = discount rate

n = time

5000 = Pv ( 1 + 0.06)^3

Pv = 5000(1.06)^-3

= $4,198.10

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a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.