Suppose interest rate i is 3% per year. What is the present value of $1,400 to be received in four years?

Question

Quizplus · Accepted Answer

The present value (PV) of a future amount can be calculated using the formula PV = FV / (1 + i)^n, where FV is the future value, i is the interest rate per period, and n is the number of periods. Here, FV = $1,400, i = 3% or 0.03, and n = 4 years. Thus, PV = $1,400 / (1 + 0.03)^4 = $1,400 / 1.1255 = $1,243.88.

Suppose Interest Rate I Is 3% Per Year