You will receive $1,000 payment in 1 year. What is its net present value assuming 5% discount rate?
A) 992
B) 952
C) 912
D) 852

Question

Quizplus · Accepted Answer

The net present value (NPV) of receiving $1,000 in one year at a 5% discount rate is calculated using the formula NPV = Future Value / (1 + r)^n, where r is the discount rate and n is the number of periods. Plugging in the values gives NPV = $1,000 / (1 + 0.05)^1 = $1,000 / 1.05 = $952.38, which rounds to $952.

You Will Receive $1,000 Payment in 1 Year