With an interest rate of 5 percent,the present value of $100 received one year from now is approximately
A) $100.
B) $105.
C) $95.
D) $90.

Question

Quizplus · Accepted Answer

The present value formula is PV = FV / (1+r), where PV is present value, FV is future value, and r is the interest rate. Plugging in the numbers, we get PV = 100 / (1+0.05) = $95.24 (rounded to the nearest cent). Therefore, choice C is the best answer.

With an Interest Rate of 5 Percent,the Present Value of $100