What is the present value of $1 received five years from now (rounded to two decimal places) if the discount rate is 12%?
A) $1.76.
B) $0.57.
C) $1.00.
D) $1.60.
E) $0.89.

Question

Quizplus · Accepted Answer

The present value (PV) of a future amount can be calculated using the formula: PV = FV / (1 + r)^n, where FV is the future value, r is the discount rate, and n is the number of periods. 
In this case, FV = 1, r = 0.12, and n = 5. 
Plugging in these values, we get: PV = 1 / (1 + 0.12)^5 = $0.57 (rounded to two decimal places). Therefore, the best choice is B.

What Is the Present Value of $1 Received Five Years