What is the present value of $500 received at the end of each of the next five years worth to you today at the appropriate discount rate of 6 percent?
A)$1,105
B)$1,850
C)$2,106
D)$2,778

Question

Quizplus · Accepted Answer

To find the present value, we use the formula PV = FV/(1+i)^n, where PV is the present value, FV is the future value, i is the interest rate, and n is the number of periods. Plugging in the values, we get PV = 500/(1+0.06)^1 + 500/(1+0.06)^2 + 500/(1+0.06)^3 + 500/(1+0.06)^4 + 500/(1+0.06)^5 = $2,106.

What Is the Present Value of $500 Received at the End