If the interest rate is 5 percent, what is the present value of $10,000 received three years from now?

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 ($10,000), r is the interest rate (5% or 0.05), and n is the number of periods (3 years). Plugging in the values, PV = $10,000 / (1 + 0.05)^3 = $10,000 / 1.157625 = $8,638 (rounded to the nearest dollar).

If the Interest Rate Is 5 Percent, What Is the Present