A bank lends some money to a business.The business will pay the bank a single payment of $180,000 in ten years' time.How much greater is the present value (PV)of this payment if the interest rate is 9% rather than 8%?

Question

Quizplus · Accepted Answer

The present value (PV) of a future payment is calculated using the formula PV = FV / (1 + r)^n, where FV is the future value, r is the interest rate, and n is the number of periods. Calculating the PV at 9% and 8% interest rates and finding the difference gives $7341.

A Bank Lends Some Money to a Business