If the interest rate is 10 percent, what is the present value of $25,000 received two years from now?
A)$20,000
B)$20,661
C)$30,250
D)$30,000

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 ($25,000), r is the interest rate (10% or 0.10), and n is the number of periods (2 years). Plugging in the values, we get PV = $25,000 / (1 + 0.10)^2 = $25,000 / 1.21 = $20,661.

If the Interest Rate Is 10 Percent, What Is the Present