Shelley won a lottery and will receive $1,000 a year for the next ten years.The value of her winnings today discounted at her discount rate is called which one of the following?
A)single amount
B)future value
C)present value
D)simple amount
E)compounded value

Question

Quizplus · Accepted Answer

The value of Shelley's winnings today is the present value, which is calculated by discounting the future cash flows (in this case, $1,000 a year for ten years) at her discount rate. Therefore, the correct choice is (C) present value.

Shelley Won a Lottery and Will Receive $1,000 a Year