Which of the following statements best reflects the concept of present value?
A)"The savings bond I bought five years ago is now worth $1,000."
B)"My $100 savings bond will be worth $200 in 10 years."
C)"You owe me $500, due at the end of the year, but I will reduce your debt to $450 if you pay me now."
D)"The $5,000 in my savings account is worth less today than five years ago because of inflation."

Question

Quizplus · Accepted Answer

Present value is the concept that a sum of money today is worth more than the same sum in the future due to its potential earning capacity. Statement C reflects this by offering a reduced amount if paid now, indicating the present value of the future $500 is $450.

Which of the Following Statements Best Reflects the Concept of Present