Assuming an interest rate of 6%,the present value of $20,000 to be received 9 years from now would be closest to:

Question

Quizplus · Accepted Answer

We can use the Present Value formula to solve the problem:

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 years.

Substituting the given values, we get:

PV = 20,000 / (1 + 0.06)^9
PV = 20,000 / 1.63
PV = 12,270.90

The closest option to this value is A) $11,840. Therefore, the answer is A.

Assuming an Interest Rate of 6%,the Present Value of $20,000