The present value of $250,000 in 10 years at 2 percent interest is approximately:
A) $205,087.
B) $212,051.
C) $305,194.
D) $195,085.

Question

Quizplus · Accepted Answer

This problem requires calculating present value, which is the amount of money needed today to equal a future amount given a certain interest rate. The formula for present value is:

Present Value = Future Value / (1 + interest rate)^number of years

Using this formula, we can calculate the present value of $250,000 in 10 years at 2 percent interest as:

Present Value = $250,000 / (1 + 0.02)^10
Present Value = $205,087 (rounded to the nearest dollar)

Therefore, the best answer is A, since it is the closest to the calculated present value.

The Present Value of $250,000 in 10 Years at 2