One dollar received in two years would be worth ____________ dollars today, with interest compounded annually. A) 1 x (1 + i)^-2 B) 1 x (1 + i)² C) 1 x [(1 + i)(1 + i)] D) None of the above

Question

Quizplus · Accepted Answer

The present value of a dollar received in the future is calculated using the formula for present value with compound interest: PV = FV / (1 + i)^n. Here, FV is 1 dollar, i is the interest rate, and n is the number of years (2 years). This simplifies to 1 x (1 + i)^-2.

One Dollar Received in Two Years Would Be Worth ____________