Present Value What is the present value of a $500 deposit in year 1 and another $100 deposit at the end of year 4 if interest rates are 5 percent?
A)$480.00
B)$493.62
C)$558.46
D)$582.27

Question

Quizplus · Accepted Answer

The present value of the $500 deposit in year 1 is $500 / (1 + 0.05)^1 = $476.19. The present value of the $100 deposit at the end of year 4 is $100 / (1 + 0.05)^4 = $82.27. Adding these two present values gives $476.19 + $82.27 = $558.46.

Present Value What Is the Present Value of a $500