The present value of $500,000 received in 4 years at 7 percent interest is approximately:
A)$381,448.
B)$655,398.
C)$344,682.
D)None of these are true.

Question

Quizplus · Accepted Answer

The present value (PV) can be calculated using the formula PV = FV / (1 + r)^n, where FV is the future value ($500,000), r is the annual interest rate (7% or 0.07), and n is the number of years (4). Plugging in these values gives PV = $500,000 / (1 + 0.07)^4 ≈ $381,448.

The Present Value of $500,000 Received in 4 Years at 7