The present value of £2,000 to be received three years from now and earning a 12 per cent return is

Question

Quizplus · Accepted Answer

To calculate the present value, we need to use the formula:
Present Value = Future Value / (1+r)^n
where r is the interest rate and n is the number of years.

In this case, Future Value = £2,000, r = 12%, and n = 3.
Plugging in the values, we get:
Present Value = 2,000 / (1 + 0.12)^3
Present Value = £1,424.02 (rounded to the nearest penny)
Therefore, the correct choice is A.

The Present Value of £2,000 to Be Received Three Years