One thousand dollars given to you a year from now is worth __________ to you today if the relevant discount rate is 10%.
A)$1,000
B)$1,100
C)$909
D)$900

Question

Quizplus · Accepted Answer

The present value of $1,000 received in one year with a discount rate of 10% can be calculated using the formula: PV = FV / (1+r)^t, where PV is the present value, FV is the future value, r is the discount rate and t is the time period. Plugging in the values, we get PV = $1,000 / (1+0.10)^1 = $909.09, which is closest to option C. Therefore, the best choice is C, $909.

One Thousand Dollars Given to You a Year from Now