Your textbook costs $90,and you can resell it in 1 year for $45.If the annual interest rate is 10%,then the present value of the textbook's resale value (to the nearest dollar)is:

Question

Quizplus · Accepted Answer

We can use the formula for present value of a future amount:

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 periods.

In this case, we want to find the present value of the resale value of the textbook, which is $45 in 1 year. The interest rate is 10%, so r = 0.1.

Using the formula:

PV = 45 / (1 + 0.1)^1

PV = 45 / 1.1

PV ≈ 40.91

Rounding to the nearest dollar, we get:

PV ≈ $41

So the best choice is B, because it is closest to the calculated present value.

Your Textbook Costs $90,and You Can Resell It in 1