With a nominal interest rate of 10%,the present discounted value of $200 to be received in one year is
A)$90.91.
B)$165.29.
C)$181.82.
D)$190.00.
E) $220.00.

Question

Quizplus · Accepted Answer

The present discounted value (PDV) formula is:

PDV = Future Value / (1+Discount rate)^Number of Periods

In this case, the future value is $200, the discount rate is 10% or 0.10 in decimal form, and the number of periods is 1 year.

PDV = $200 / (1+0.10)^1

PDV = $200 / 1.10

PDV = $181.82

Therefore, the present discounted value of $200 to be received in one year with a nominal interest rate of 10% is $181.82.

The correct answer is Choice C.

With a Nominal Interest Rate of 10%,the Present Discounted Value