If the interest rate is 12.5 percent,what is the present value of $200 received in one year?
A) $25
B) $177.78
C) $197
D) $225

Question

Quizplus · Accepted Answer

The formula for calculating present value is: 
PV = FV / (1 + r)n 
Where: 
PV = present value 
FV = future value 
r = interest rate 
n = number of periods 
Applying the formula, we get: 
PV = 200 / (1 + 0.125)1 
= 200 / 1.125 
= 177.78 (rounded to two decimal places) 
Therefore, the present value of $200 received in one year at an interest rate of 12.5% is $177.78, which is option B.

If the Interest Rate Is 12