If the interest rate is 7.5 percent,then what is the present value of $4,000 to be received in 6 years?
A)$2,420.68
B)$2,591.85
C)$2,996.33
D)$3,040.63

Name: If the interest rate is 7.5 percent,then what is the present value of $4,000 to be received in 6 years? A)$2,420.68 B)$2,591.85 C)$2,996.33 D)$3,040.63
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Question

Quizplus · Accepted Answer

We can use the formula for present value of a single sum: PV = FV/(1+r)^n
PV = 4000/(1+0.075)^6
PV = 4000/1.575818...
PV = $2,591.85 (rounded to nearest cent)
Therefore, the best choice is B.

If the Interest Rate Is 7