William deposited $25,000 today that would earn an interest at the rate of 3% for a period of 2 years. The amount of $25,000 represents the:

Question

Quizplus · Accepted Answer

The amount of $25,000 that William deposited is the present value of the investment. This means that it is the current worth of the investment and will grow to a different value over the 2-year period depending on the interest rate and compounding. Therefore, choices A and B are incorrect because they refer to annuities, which involve a series of periodic payments over time. Choice D is also incorrect because it refers to the future value of the investment, which is not known until the end of the investment period.

William Deposited $25,000 Today That Would Earn an Interest at the Rate