The present value of a $110 payment in 1 year,given an annual 10% interest rate,is:

Question

Quizplus · Accepted Answer

To calculate the present value of a future payment, we use the formula:

PV = FV / (1 + r)^n

Where: 
PV = present value
FV = future value
r = interest rate
n = number of periods

In this case, we have:
FV = $110
r = 10%
n = 1

Plugging in the values, we get:

PV = $110 / (1 + 0.1)^1
PV = $110 / 1.1
PV = $100

Therefore, the present value of a $110 payment in 1 year, given an annual 10% interest rate, is $100. So the best choice is C.

The Present Value of a $110 Payment in 1 Year,given