The present value of $5,000 one year in the future at a 5 percent interest rate is approximately

Question

Quizplus · Accepted Answer

The formula for present value is:

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.

Plugging in the given values, we get:

PV = 5,000 / (1 + 0.05)^1
PV = 5,000 / 1.05
PV = 4,761.90

Therefore, the closest answer choice is A) $4,762.

The Present Value of $5,000 One Year in the Future