Which of the following is the correct formula for calculating the present value of an amount invested (A) at an interest rate of r, for n periods?

Question

Quizplus · Accepted Answer

The correct formula for calculating the present value of an amount invested is A x (1/(1 + r)n), where A is the amount invested, r is the interest rate and n is the number of periods. Choice A is incorrect because it multiplies n instead of raising (1 + r) to the power of n. Choice C is incorrect because it divides by (r x n) instead of raising (1 + r) to the power of -n. Choice D is incorrect because it applies the interest rate (r) to n instead of applying it to the present value calculation.

Which of the Following Is the Correct Formula for Calculating