A company invested $50 million in building a factory 10 years ago when the annual interest rate was 2 per cent. What is the present value of the yield now?
A) $49 million
B) $51 million
C) $61 million
D) $70 million

Question

Quizplus · Accepted Answer

To calculate the present value of the yield, we need to use the formula for compound interest: 
A = P(1 + r/n)^(nt)
Where A is the final amount, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

In this case, P = $50 million, r = 2%, n = 1, and t = 10. 
A = $50 million (1 + 0.02/1)^(1x10)
A = $61 million

Therefore, the present value of the yield is $61 million. Therefore, the best choice is option C.

A Company Invested $50 Million in Building a Factory 10