Which of the following is the correct expression for finding the present value of a $1,000 payment one year from today if the interest rate is 6 percent?
A) $1,000 (1.06)
C) $1,000/(1.06)
D) None of the above is correct.

Question

Which of the following is the correct expression for finding the present value of a $1,000 payment one year from today if the interest rate is 6 percent?
A) $1,000 (1.06) 
C) $1,000/(1.06) 
D) None of the above is correct.

Quizplus · Accepted Answer

The correct expression for finding the present value of a future cash flow is dividing it by (1+i), where i is the interest rate. Therefore, the expression would be $1,000/(1.06).

Which of the Following Is the Correct Expression for Finding