What is the present value of $100 promised one year from now at 10% annual interest?
A) $89.50
B) $90.00
C) $90.91
D) $91.25

Question

Quizplus · Accepted Answer

The present value (PV) is calculated using the formula PV = FV / (1 + r)^n, where FV is the future value ($100), r is the annual interest rate (10% or 0.10), and n is the number of periods (1 year). Plugging in the values gives PV = $100 / (1 + 0.10)^1 = $100 / 1.10 = $90.91.

What Is the Present Value of $100 Promised One Year