Which of the following is the correct expression for finding the present value of a $1,000 payment one year from today if the interest rate is 6 percent?
A) $1,000 1.06)
B) $1,0001.06)
C) $1,000/1.06)
D) None of the above is correct.

Question

Which of the following is the correct expression for finding the present value of a $1,000 payment one year from today if the interest rate is 6 percent?
A) $1,000 1.06) 
B) $1,0001.06) 
C) $1,000/1.06) 
D) None of the above is correct.

Quizplus · Accepted Answer

The correct expression for finding the present value of a future payment is to divide the future value by (1 + interest rate). Therefore, the correct expression is $1,000/1.06 = $943.40. Option A is incorrect because it would result in a higher present value than the actual value. Option B is incorrect because it only factors in the interest rate and does not divide by (1 + interest rate). Option D is incorrect because one of the other options is correct.

Which of the Following Is the Correct Expression for Finding