The present value of $1,000 to be received at the end of five years, if the discount rate is 10%, is
A) $621.
B) $784.
C) $614.
D) $500.

Question

Quizplus · Accepted Answer

The present value (PV) is calculated using the formula PV = FV / (1 + r)^n, where FV is the future value, r is the discount rate, and n is the number of periods. For $1,000 at 10% for 5 years, PV = 1000 / (1 + 0.10)^5 = $620.92, which rounds to $621.

The Present Value of $1,000 to Be Received at the End