The present value of a future payment to be received in three years is $1,000.If the interest rate is 5%,what is the amount that will be paid in three years?
A)$1,150.00
B)$1,157.63
C)$1,215.51
D)$1,250.00

Question

Quizplus · Accepted Answer

We can use the formula for present value to solve for the future payment:
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.
We plug in the values given: 
1000 = FV / (1 + 0.05)^3
1000 = FV / 1.15763
FV = 1000 * 1.15763
FV = $1,157.63
Therefore, the answer is B.

The Present Value of a Future Payment to Be Received