If the annual interest rate is 10%,$5.00 received today has the same present value as

Question

Quizplus · Accepted Answer

To find the present value of an amount received in the future, you use the formula PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the annual interest rate, and n is the number of years. In this case, to find the equivalent of $5.00 today at a 10% annual interest rate one year from now, you would rearrange the formula to solve for FV, giving FV = PV * (1 + r)^n. Plugging in the values gives FV = $5.00 * (1 + 0.10)^1 = $5.50.

If the Annual Interest Rate Is 10%,$5