The present value of $100 expected two years from today at a discount rate of 6 percent is
A)$112.36.
B)$106.00.
C)$100.00.
D)$89.00.

Question

Quizplus · Accepted Answer

The present value (PV) is calculated using the formula PV = FV / (1 + r)^n, where FV is the future value ($100), r is the discount rate (0.06), and n is the number of periods (2 years). Plugging in the values, we get PV = $100 / (1 + 0.06)^2 = $100 / 1.1236 = $89.00.

The Present Value of $100 Expected Two Years from Today