What is the present value of $1 received five years from now (rounded to two decimal places)if the discount rate is 12%?

Question

Quizplus · Accepted Answer

The present value can be calculated using the formula:
PV = FV / (1 + r)^n
where PV is the present value, FV is the future value, r is the discount rate, and n is the number of periods.

In this case, FV = $1, r = 12%, and n = 5. Plugging in the values, we get:
PV = $1 / (1 + 0.12)^5
PV = $1 / 1.7623
PV = $0.57 (rounded to two decimal places)

Therefore, the present value of receiving $1 five years from now with a discount rate of 12% is $0.57.

What Is the Present Value of $1 Received Five Years