Calculate, to the nearest cent, the present value of an investment that will be worth $4,000 after 9 years, at 10% per year, compounded annually.
A) $P V = \$ 3,712.13$
B) $P V = \$ 1,696.39$
C) $P V = \$ 3,619.52$
D) $P V = \$ 4,444.44$
E) $P V = \$ 1,632.35$

Question

Calculate, to the nearest cent, the present value of an investment that will be worth $4,000 after 9 years, at 10% per year, compounded annually.  
A) $P V = \$ 3,712.13$
B)   $P V = \$ 1,696.39$
C)    $P V = \$ 3,619.52$
D)   $P V = \$ 4,444.44$
E)   $P V = \$ 1,632.35$

Quizplus · Accepted Answer

The present value $PV$ of an investment can be calculated using the formula $PV = \frac{FV}{(1 + r)^n}$, where $FV$ is the future value, $r$ is the annual interest rate (as a decimal), and $n$ is the number of years. Plugging in the given values: $PV = \frac{4000}{(1 + 0.10)^9} = \$1,696.39$.

Calculate, to the Nearest Cent, the Present Value of an Investment