If the interest rate is 10%, the present value of $100 to be paid next year is
A)$100/1.1.
B)$100/.1.
C)$100/10.
D)$110.

Question

Quizplus · Accepted Answer

The present value of $100 to be paid next year can be calculated using the present value formula:

PV = FV / (1 + r)^n

where PV is the present value, FV is the future value, r is the interest rate, and n is the number of periods.

Substituting the given values, we get:

PV = $100 / (1 + 0.1)^1
PV = $100 / 1.1
PV = $90.909

Therefore, the best choice is A, $100/1.1, which is the present value of $100 to be paid next year at an interest rate of 10%.

If the Interest Rate Is 10%, the Present Value of $100