Suppose the interest rate is 5 percent per year.What is the present value of the $210 that will be received two years from today?

Question

Quizplus · Accepted Answer

To calculate present value, we use the formula PV = FV/(1+r)^n where FV is the future value, r is the interest rate, and n is the number of years. In this case, FV is $210, r is 5%, and n is 2. Plugging these values into the formula, we get PV = 210/(1+0.05)^2 = $190.48. Therefore, choice B is the best answer.

Suppose the Interest Rate Is 5 Percent Per Year