What is the present value (PV)of $1 million received 100 years from now,assuming the interest rate is 5% per year?
A)$10,000
B)$7,604
C)$9,524
D)$11,114
E)$112

Question

Quizplus · Accepted Answer

The present value formula is:
PV = FV / (1 + r)^n

where:
FV = future value
r = interest rate per year
n = number of years

In this case, we have:
FV = $1 million
r = 5%
n = 100 years

Substituting these values into the formula, we get:

PV = $1 million / (1 + 0.05)^100
PV = $7,604

Therefore, the present value of receiving $1 million 100 years from now, assuming the interest rate is 5% per year, is $7,604. Therefore, the best choice is B.

What Is the Present Value (PV)of $1 Million Received 100