The present value of £10,000 to be received five years from now and earning a 12 per cent return is

Question

Quizplus · Accepted Answer

We can use the present value formula:

PV = FV / (1 + r)^n

where PV is the present value, FV is the future value, r is the interest rate, and n is the number of periods.

Plugging in the numbers, we get:

PV = 10,000 / (1 + 0.12)^5 
PV = 10,000 / 1.7623 
PV ≈ £5,670

Therefore, the best choice is B.

The Present Value of £10,000 to Be Received Five Years