If the annual interest rate is i = 0.02 (2 percent), the present value of the future sum of $100, expected to be paid in three years from today, is:

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Quizplus · Accepted Answer

The present value (PV) is calculated using the formula PV = FV / (1 + i)^n, where FV is the future value, i is the interest rate, and n is the number of years. Plugging in the values: PV = $100 / (1 + 0.02)^3 = $100 / 1.061208 = $96.12.

If the Annual Interest Rate Is I = 0