If the interest rate is 7 percent,$500 received at the end of nine years is worth how much today? A) 500/(0.07)⁹ B) 500/(1 + .07)⁹ C) 500/(1 + 7)⁹ D) 500

Question

Quizplus · Accepted Answer

The present value can be calculated using the formula: Present Value = Future Value / (1+interest rate)^number of years. Substituting the given values, we get Present Value = 500/(1+0.07)^9 = 500/(1.07)^9 = $258.88 (rounded off to two decimal places). Thus, option B is the correct choice.

If the Interest Rate Is 7 Percent,$500 Received at the End