If you want to know the present value of a future payment received in 1 year,what formula can you use?

Question

Quizplus · Accepted Answer

The formula for calculating present value of a future payment received in 1 year is to divide the future payment by one plus the rate of interest. This is because the present value is discounted at the rate of interest for one period, which in this case is 1 year. Option A is incorrect because it does not divide by the rate of interest to discount the future payment. Option C is incorrect because it does not involve the future payment in the calculation. Option D is incorrect because it multiplies the future payment by the rate of interest, which does not result in the present value.

If You Want to Know the Present Value of a Future