If the value of an environmental benefit realized two years from today is $970.20, and the annual rate of return is 5 percent, then its present discounted value is
A) $924
B) $880
C) $1,018.71
D) $1069.65

Question

Quizplus · Accepted Answer

The present discounted value (PDV) can be calculated using the formula PDV = FV / (1 + r)^n, where FV is the future value ($970.20), r is the annual rate of return (0.05), and n is the number of years (2). Plugging in the values, PDV = $970.20 / (1 + 0.05)^2 = $970.20 / 1.1025 = $880. Therefore, the correct answer is $880.

If the Value of an Environmental Benefit Realized Two Years