The present discounted value of $75 to be received in two years with no interest is ____ when the interest rate is 8 percent.
A)$64.30
B)$69.44
C)$87.48
D)$75
E)$81

Question

Quizplus · Accepted Answer

The formula to calculate present discounted value is: 
Present Discounted Value = Future Value / (1+interest rate)^number of years
Plugging in the given values, we get: 
Present Discounted Value = 75 / (1+0.08)^2
 = 75 / 1.1664
 = $64.30 (rounded to nearest cent)
Therefore, the correct answer is (A) $64.30.

The Present Discounted Value of $75 to Be Received in Two