The present value of $1,000 to be received in 5 years is ________ if the discount rate is 12.78%.
A) $368
B) $494
C) $548
D) $687

Question

Quizplus · Accepted Answer

The present value (PV) can be calculated using the formula PV = FV / (1 + r)^n, where FV is the future value ($1,000), r is the discount rate (12.78% or 0.1278), and n is the number of periods (5 years). Plugging in the values, we get PV = $1,000 / (1 + 0.1278)^5 ≈ $548.

The Present Value of $1,000 to Be Received in 5