Which of the following best expresses the present value of $500 that you have to wait four years and three months to receive?
A)($500/4.25) x (1+i)
B)$500 x 4.25 x (1 +i)
C)$500/(1+i)4.25
D)($500/4) x (1+i)3

Question

Quizplus · Accepted Answer

The formula for calculating present value is: PV = FV/(1+i)^n, where PV is the present value, FV is the future value, i is the interest rate, and n is the number of periods. In this case, FV = $500, i is not given, and n is 4.25 years. Since we don't know the interest rate, we can't solve for present value exactly, but we can rearrange the formula to get PV = FV/(1+i)^n = $500/(1+i)^4.25. Therefore, the best choice is C.

Which of the Following Best Expresses the Present Value of $500