With a nominal interest rate of 22%, the present discounted value of $1100 to be received in one year is:
A) $796.54.
B) $690.54.
C) $901.64.
D) $646.54.
E) $851.54.

Question

Quizplus · Accepted Answer

The present discounted value (PDV) is calculated using the formula PDV = FV / (1 + r)^n, where FV is the future value, r is the interest rate, and n is the number of periods. Here, FV = $1100, r = 22% or 0.22, and n = 1. So, PDV = $1100 / (1 + 0.22) = $1100 / 1.22 = $901.64.

With a Nominal Interest Rate of 22%, the Present Discounted