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?
A) 300/(1.5)5
B) 300/(1.05)5
C) 300 × 1.5 × 5
D) 5.05/300

Question

Quizplus · Accepted Answer

The present value can be calculated using the formula PV = FV/(1+r)n, where FV is the future value, r is the interest rate, and n is the number of years. Plugging in the given values, we get PV = 300/(1.05)5. Therefore, option B is the correct answer.

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