What is the present value of a payment of $100 to be made one year from today?
A)$100*(1 + r)
B)$100/(1 + r)
C)$100 - $100r
D)$100 - (1 + r)/$100

Question

Quizplus · Accepted Answer

The present value of a payment to be received in the future is calculated by dividing the payment amount by the sum of 1 and the interest rate (in decimal form) raised to the power of the number of years until the payment is made. In this case, the calculation is: $100/(1 + r)^1 = $100/(1 + r), which is option B.

What Is the Present Value of a Payment of $100