If the present value of $110 to be received one year from now is $100, what will $100 be worth two years from now?

Question

Quizplus · Accepted Answer

We know that the present value of $110 to be received one year from now is $100. Therefore, the interest rate is 10%. We can use this to calculate the future value of $100 two years from now using the formula FV = PV(1+r)^t, where FV is the future value, PV is the present value, r is the interest rate, and t is the number of years. 
Plugging in the values, we get FV = $100(1+0.1)^2 = $121, which is choice B.

If the Present Value of $110 to Be Received One