If the interest rate is r (expressed as a decimal number), the present value today of $1 to be received n years from today equals ____.
A)$1rn
B)$1(1 + r)n
C)$1/(1 + r)n
D)$1/(1 + n)r

Question

Quizplus · Accepted Answer

The present value formula is 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 years. The question is asking for the present value of $1 to be received n years from today, so FV = $1. Substituting these values into the formula, we get PV = $1/(1+r)^n. Therefore, the answer is (C).

If the Interest Rate Is R (Expressed as a Decimal