What is the present value of $200 promised two years from now at 5% annual interest?
A) $190.00
B) $220.00
C) $180.00
D) $181.41

Question

Quizplus · Accepted Answer

Using the formula for present value, we have:
PV = FV / (1 + r)^n
where PV is the present value, FV is the future value, r is the annual interest rate, and n is the number of years.

Substituting the given values, we get:
PV = 200 / (1 + 0.05)^2
PV = 200 / 1.1025
PV = $181.41 (rounded to the nearest cent)

Therefore, the best choice is D.

What Is the Present Value of $200 Promised Two Years