At an interest rate of 8.25% compounded annually,what is the present discounted value of $2000 to be received 2 years from now?
A) $1670.00
B) $1706.78
C) $1716.74
D) $1835.00

Question

Quizplus · Accepted Answer

To calculate the present discounted value of the $2000 to be received in 2 years, we need to use the formula for compound interest:

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

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

Plugging in the given values, we get:

Present Value = 2000 / (1 + 0.0825)^2
Present Value = 2000 / 1.1751
Present Value = $1706.78 (rounded to the nearest cent)

Therefore, the best choice is B.

At an Interest Rate of 8