Scenario: An investor is considering three different investment options. Investing in Option A pays him $4,000 after 6 years, investing in Option B pays him $7,600 after 7 years, and investing in Option C pays him $9,000 after 8 years. If he deposits the amount with a bank, he would receive an annual interest rate of 9 percent.
-Refer to the scenario above.Which of the following statements is true?

Question

Quizplus · Accepted Answer

The present value (PV) of an investment is calculated using the formula PV = FV / (1 + r)^n, where FV is the future value, r is the annual interest rate, and n is the number of years. Comparing the present values of the options using a 9% interest rate shows that Option B has a higher present value than Option A, due to its higher future value and relatively close time frame.

Scenario: an Investor Is Considering Three Different Investment Options