Six years from now, you will be inheriting $100,000. What is this inheritance worth to you today if you can earn 6.5 percent interest, compounded annually?
A) $68,533.41
B) $70,008.21
C) $72,419.05
D) $72,798.47
E) $74,003.15

Question

Quizplus · Accepted Answer

The correct answer is A because the present value of an inheritance is calculated using the formula: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the annual interest rate, and n is the number of years. In this case, the future value is $100,000, the annual interest rate is 6.5%, and the number of years is 6. Plugging these values into the formula, we get: PV = 100,000 / (1 + 0.065)^6 = $68,533.41.

Six Years from Now, You Will Be Inheriting $100,000