What is the present value of $500 to be received eight years from now if the interest rate is 5 percent?
A) $300
B) $338.42
C) $700
D) $738.72

Question

Quizplus · Accepted Answer

Using the present value formula, we have:
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 values, we get:
PV = 500 / (1 + 0.05)^8
PV = $338.42
Therefore, the present value of $500 to be received eight years from now at an interest rate of 5 percent is $338.42. Option B is the best choice.

What Is the Present Value of $500 to Be Received