Assuming an interest rate of 10%, the present value of $20,000 to be received 10 years from now would be closest to: Present Value of $1
Present Value of Annuity of $1

Question

Assuming an interest rate of 10%, the present value of $20,000 to be received 10 years from now would be closest to: Present Value of $1
 Present Value of Annuity of $1

Quizplus · Accepted Answer

To find the present value, we use the formula:

Present Value = Future Value / (1 + r)^n

where r is the interest rate and n is the number of years.

Plugging in the values, we get:

Present Value = $20,000 / (1 + 0.1)^10
Present Value = $7,720.95

So, the present value of $20,000 to be received 10 years from now with an interest rate of 10% is closest to $7,720. Therefore, the best choice is B.

Assuming an Interest Rate of 10%, the Present Value of $20,000