The present value of $200 received one year from now when the prevailing interest rate is 8 percent is _____

Question

Quizplus · Accepted Answer

Using the formula for present value:
PV = FV / (1 + r)^t
where PV is present value, FV is future value, r is the interest rate, and t is time in years.

Plugging in the given values, we get:
PV = 200 / (1 + 0.08)^1
PV = 200 / 1.08
PV = $185.19

Therefore, the present value of $200 received one year from now when the prevailing interest rate is 8 percent is $185.19.

The Present Value of $200 Received One Year from Now