Discounting One Year What is the present value of a $250 payment in one year when the discount rate is 6 percent?
A)$245.00
B)$235.85
C)$250.00
D)$265.00

Question

Quizplus · Accepted Answer

To calculate the present value, we need to discount the $250 payment using the discount rate of 6 percent. Since we are discounting for one year only, the calculation is simple:
Present value = $250 / (1 + 0.06) = $235.85
Therefore, the best choice is B, as it gives the correct present value of the payment.

Discounting One Year What Is the Present Value of a $250