If the interest rate is 3 percent, to get back $500 in two years you would need to deposit ________ today.

Question

Quizplus · Accepted Answer

To calculate the present value of $500 received in two years at an interest rate of 3%, you use the formula PV = FV / (1 + r)^n, where PV is the present value, FV is the future value ($500), r is the annual interest rate (0.03), and n is the number of years (2). Plugging in the numbers: PV = $500 / (1 + 0.03)^2 = $500 / 1.0609 = $471.30.

If the Interest Rate Is 3 Percent, to Get Back