Find the present value of $100 to be received at the end of two years if the discount rate is 12% compounded monthly.
A)$66.50
B)$78.76
C)$68.80
D)$91.80
E)$79.75

Question

Quizplus · Accepted Answer

The present value (PV) is calculated using the formula: $ PV = \frac{FV}{(1 + r/n)^{nt}} $, where $ FV = 100 $, $ r = 0.12 $, $ n = 12 $, and $ t = 2 $. Plugging in these values gives $ PV = \frac{100}{(1 + 0.12/12)^{12 \times 2}} \approx 78.76 $.

Find the Present Value of $100 to Be Received at the End