A project that you are considering today is expected to provide benefits worth $168,000 in one year.If the risk-free rate of interest (rf)is 4.5%,then the value of the benefits of this project today are closest to:
A)$160,440.
B)$160,766.
C)$168,000.
D)$175,560.

Question

Quizplus · Accepted Answer

The value of the benefits of the project today can be calculated using the formula for present value:

PV = FV / (1 + r)^n

Where PV is the present value, FV is the future value, r is the risk-free interest rate, and n is the number of years.

In this case, FV = $168,000, r = 4.5%, and n = 1. Plugging these values into the formula, we get:

PV = $168,000 / (1 + 0.045)^1 = $160,766.10

Therefore, the value of the benefits of the project today is closest to option B, which is $160,766.

A Project That You Are Considering Today Is Expected to Provide