If the interest rate is 4% receiving $100 in 2 years is equivalent to receiving what amount today?

Question

Quizplus · Accepted Answer

We can use the formula for present value of future payments:

PV = FV / (1 + r)^n

where PV is the present value, FV is the future value, r is the interest rate, and n is the number of periods.

Plugging in the given values, we get:

PV = 100 / (1 + 0.04)^2
PV = 92.45

Therefore, the best choice is B) $92.45, which is the present value of receiving $100 in 2 years with a 4% interest rate.

If the Interest Rate Is 4% Receiving $100 in 2