Asked by kimberly reilly on May 16, 2024
Verified
The present value of a dollar received one year from now,given a current interest rate of 10%,is about
A) $.90.
B) $.91.
C) $1.00.
D) $1.09.
E) $1.10.
Present Value
The value today of the stream of expected future annual income that a property generates.
Interest Rate
Interest paid divided by amount borrowed.
- Learn how interest rates affect the present value of future money.
Verified Answer
CA
CHRISTINE ANTONELLIMay 20, 2024
Final Answer :
B
Explanation :
The formula for present value is: PV= FV/(1+r), where FV is the future value, r is the interest rate and PV is the present value.
So, PV= $1/(1+0.1) = $0.909 or approximately $0.91. Therefore, the best choice is B.
So, PV= $1/(1+0.1) = $0.909 or approximately $0.91. Therefore, the best choice is B.
Learning Objectives
- Learn how interest rates affect the present value of future money.