What is the present value of $500 promised four years from now at 5% annual interest?
A) $411.35
B) $400.00
C) $607.75
D) $520.00

Question

Quizplus · Accepted Answer

Using the formula for Present Value (PV) of a future sum of money: 
PV = FV / (1 + r)^n 
where FV is the future value, r is the annual interest rate, and n is the number of years until the future value is received. 
Substituting the given values, we get: 
PV = 500 / (1 + 0.05)^4 
PV = 500 / 1.2155 
PV = 411.35
Therefore, the present value of $500 promised four years from now at 5% annual interest is $411.35, which is option A.

What Is the Present Value of $500 Promised Four Years