If the market interest rate is 5 percent,the present value of $200 to be paid to you at the end of two years is _____

Question

Quizplus · Accepted Answer

Using the present value formula:
PV=FV/(1+R)^n
where:
R=5% or 0.05 (market interest rate)
n=2 years
FV=$200

PV=$200/(1+0.05)^2
PV=$200/1.1025
PV=$181.41

Therefore, the present value of $200 to be paid to you at the end of two years is $181.41, rounded to the nearest cent. Option A is the best choice.

If the Market Interest Rate Is 5 Percent,the Present Value