What is the present value of $500.00 to be paid in two years if the interest rate is 5 percent?
A) $453.51
B) $550.00
C) $476.25

Question

Quizplus · Accepted Answer

To find the present value, we need to use the formula PV = FV/(1 + i)^n, where PV is the present value, FV is the future value ($500.00 in this case), i is the interest rate (5% or 0.05), and n is the number of years (2 in this case). Plugging in the values, we get PV = 500.00/(1 + 0.05)^2 = $453.51. Therefore, choice A is the correct answer.

What Is the Present Value of $500