I'm helping out an economics student, and this is an exercise on one of her problem sheets.
I don't have a background in economics, but I would expect the answer to be $$1000\left(1-\frac{.05}{12}\right)^{36}\approx 860.44,$$ as the initial amount of money shrinks by a factor of $\frac{.05}{12}$ each month, and in three years there are $36$ months.
However, the exercise sheet only gives the following possible answers: $580.34, 982.37, 878.12, 860.98.$
Is the correct answer the last one (with a likely typo), or have I solved this incorrectly?
$$PV = \frac{1000}{\left(1 + \dfrac{.05}{12}\right)^{12 \cdot 3}} = 860.98$$