If the interest rate is 11%,$1500 received at the end of 12 years is worth how much today?
A)500*(1+.11)12
B)500/(1 + .11)12
C)500/(1 + 11)12.
D)500

Question

Quizplus · Accepted Answer

The formula for present value of a future sum of money is:
PV = FV / (1 + r)^n
where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years.

Using this formula, we have:
PV = 1500 / (1 + 0.11)^12
PV = 1500 / 3.4202
PV ≈ $438.97

Therefore, the best choice is B, which represents the formula for present value.

If the Interest Rate Is 11%,$1500 Received at the End