What is the present value of a payment of $100 to be made one year from today?
A) $100*1 + r)
B) $100/1 + r)
C) $100 - $100 r
D) $100 - 1 + r)/$100

Question

What is the present value of a payment of $100 to be made one year from today?
A) $100*1 + r) 
B) $100/1 + r) 
C) $100 - $100 r 
D) $100 - 1 + r)/$100

Quizplus · Accepted Answer

To calculate the present value of a future payment, we need to discount the payment using the appropriate discount rate. The formula for present value is: PV = FV / (1+r), where PV is the present value, FV is the future value, and r is the discount rate. In this case, since the payment is to be made one year from today, we only need to use the discount rate for one year. Choice B is the correct answer since it correctly applies the formula for present value.

What Is the Present Value of a Payment of $100