Assuming an interest rate of 10%, the present value of $50,000 to be received 8 years from now would be closest to

Question

Quizplus · Accepted Answer

The present value can be calculated using the formula:

Present Value = Future Value / (1 + r)^n

where r is the annual interest rate and n is the number of years.

Substituting the given values, we get:

Present Value = 50,000 / (1 + 0.1)^8
             = 50,000 / 2.1436
             = $23,350 (rounded to the nearest dollar)

Therefore, the best choice is A) $23,350.

Assuming an Interest Rate of 10%, the Present Value of $50,000