What is the present value of a payment of $100 to be made one year from today if the interest rate is 5 percent?
A)$105.26
B)$105.00
C)$95.24
D)$95.00

Question

Quizplus · Accepted Answer

The present value can be calculated using the formula:
Present value= Future value / (1 + interest rate) ^ time
Here, Future value = $100, Interest rate = 5%, Time = 1 year

Present value= $100 / (1 + 0.05) ^ 1
Present value= $100 / 1.05
Present value= $95.24

Therefore, the correct answer is choice C: $95.24.

What Is the Present Value of a Payment of $100