An individual is offered the sum of $100 000 to be received after 5 years.If the relevant interest rate is 8% p.a. ,compounding annually,then the present value of this promised sum is $68 058.32.

Question

Quizplus · Accepted Answer

The present value (PV) is calculated using the formula PV = FV / (1 + r)^n, where FV is the future value ($100,000), r is the interest rate (0.08), and n is the number of years (5). Plugging in these values gives PV = $100,000 / (1.08)^5 = $68,058.32.

An Individual Is Offered the Sum of $100 000 to Be