If you knew that an investment was going to pay you $215,892.50 in 10 years, and you knew that the annual interest rate over that time would be 8 percent, you could calculate the present value to be:
A)$80,000.
B)$100,000.
C)$150,000.
D)$125,000.

Question

Quizplus · Accepted Answer

The present value (PV) can be calculated using the formula PV = FV / (1 + r)^n, where FV is the future value ($215,892.50), r is the annual interest rate (0.08), and n is the number of years (10). Plugging these values into the formula gives PV = $215,892.50 / (1 + 0.08)^10, which equals approximately $100,000.

If You Knew That an Investment Was Going to Pay