If the interest rate is 7.5 percent, the present value of $500 to be received three years from today is $477.50.

Name: If the interest rate is 7.5 percent, the present value of $500 to be received three years from today is $477.50.
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Question

Quizplus · Accepted Answer

The present value of $500 received in three years at a 7.5% interest rate is calculated using the formula PV = FV / (1 + r)^n. Plugging in the values: PV = 500 / (1 + 0.075)^3 = 500 / 1.242 = $402.11, not $477.50.

If the Interest Rate Is 7