The present value of $1000 payable in two years from today is: A)$1000/(1 + 2r). B)$1000/(1 + r)². C)$1000/(1 - 2r). D)$1000.

Question

Quizplus · Accepted Answer

The present value formula is PV = FV/(1+r)^n, where PV is the present value, FV is the future value, r is the discount rate, and n is the number of years. Plugging in the given values, we get PV = 1000/(1+r)^2. Choice B is the only one that correctly represents this formula in mathematical terms, so it is the correct answer.

The Present Value of $1000 Payable in Two Years from Today