Given an 8 percent interest rate, compute the present value of payments made in years 1, 2, 3, and 4 of $900, $800, $700, and $600.
A) $2,409.33
B) $2,515.90
C) $2,591.72
D) $2,611.38

Question

Quizplus · Accepted Answer

The present value is calculated by discounting each payment back to the present using the formula PV = FV / (1 + r)^n, where FV is the future value, r is the interest rate, and n is the year. Summing these values gives $2,515.90.

Given an 8 Percent Interest Rate, Compute the Present Value