The present discounted value of $100 to be received one year from now,if the interest rate is 2.5 percent,is closest to

Question

Quizplus · Accepted Answer

We can use the formula for present discounted value (PDV) which is:

PDV = FV / (1 + r)^n

where FV is the future value, r is the interest rate, and n is the number of periods (in years).

In this case, FV = $100, r = 0.025, and n = 1. Plugging these values into the formula, we get:

PDV = $100 / (1 + 0.025)^1
PDV = $100 / 1.025
PDV = $97.56 (rounded to the nearest penny)

Therefore, the closest answer is A) $98.

The Present Discounted Value of $100 to Be Received One