With a constant nominal interest rate equal to i, the present discounted value of $1.00 to be received 6 years from today is equal to:
A) 1 + i.
B) 1/(1 + i)6.
C) i6.
D) 6(1 + i).
E) (1 + i)6.

Question

Quizplus · Accepted Answer

The present discounted value of $1 to be received 6 years from today is given by the formula PV = FV/(1+i)^n, where PV is the present value, FV is the future value, i is the interest rate, and n is the number of years. Substituting the given values, we get PV = 1/(1+i)^6.

With a Constant Nominal Interest Rate Equal to I, the Present