The present value of $300 received 5 years in the future would be calculated as which of the following when the interest rate is 5 per cent?

Question

Quizplus · Accepted Answer

The present value formula is PV = FV / (1 + r)^n, where PV is present value, FV is future value, r is the interest rate, and n is the number of periods. Plugging in the given values, we get PV = 300 / (1 + 0.05)^5 = 300 / 1.276 = 234.74. Out of the given options, only option B uses the correct formula and numbers to arrive at this same value. Therefore, B is the best choice.

The Present Value of $300 Received 5 Years in the Future