The present discounted value of $100 to be received one year from now,if the interest rate is 2.5 percent,is closest to
A)$98.
B)$100.
C)$103.
D)$95.

Question

Quizplus · Accepted Answer

The present value of $100 to be received one year from now can be calculated using the discount factor formula: 
PV = FV / (1+r)^n 
where PV is the present value, FV is the future value, r is the interest rate, and n is the number of periods.

In this case, FV is $100, r is 2.5%, and n is 1 year. Plugging these values into the formula, we get: 
PV = $100 / (1+0.025)^1 = $97.56

Rounding to the nearest dollar, the closest answer choice is A) $98.

The Present Discounted Value of $100 to Be Received One