The present value of £5609 receivable at the end of year 5 assuming a 10% discount rate is equal to (to the nearest £):

Question

Quizplus · Accepted Answer

The present value formula is:
PV = FV / (1+r)^n
PV = Present Value
FV = Future Value
r = discount rate
n = number of years

Using the formula:
PV = £5609 / (1+0.1)^5
PV = £3483.07

Therefore, the present value of £5609 receivable at the end of year 5 assuming a 10% discount rate is approximately £3483 (nearest £). Hence, the best choice is C.

The Present Value of £5609 Receivable at the End of Year