The present value of $525 received one year from today, assuming an annual rate of return of 5 percent is
A) $551.25
B) $525
C) $500
D) none of the above

Question

Quizplus · Accepted Answer

The present value (PV) is calculated using the formula PV = FV / (1 + r)^n, where FV is the future value ($525), r is the annual rate of return (0.05), and n is the number of years (1). Plugging in these values gives PV = $525 / (1 + 0.05)^1 = $500.

The Present Value of $525 Received One Year from Today