Dean Martin's income was $1000 in 1950.If the annual interest rate was five per cent, then the present value of his 1950 income in the year 2000 would be:

Question

Quizplus · Accepted Answer

Using the compound interest formula, we can calculate the present value of the income:
PV = C/(1 + r)^n
where PV is the present value, C is the initial amount, r is the annual interest rate, and n is the number of years.
In this case, C = $1000, r = 5%, and n = 50 (2000 - 1950). Plugging in these values, we get:
PV = 1000/(1 + 0.05)^50
PV = $11,467.39
Therefore, the present value of Dean Martin's 1950 income in the year 2000 would be $11,467.39. The closest answer choice is D, $114,674.

Dean Martin's Income Was $1000 in 1950