If the interest rate is 11%,$1500 received at the end of 12 years is worth how much today?
A)1500*(1+0.11)^12
B)1500/(1 +0 .11)^12
C)1500/(1 + 11)^12
D)1500

Question

​If the interest rate is 11%,$1500 received at the end of 12 years is worth how much today?
A)​1500*(1+0.11)^12
B)1500/(1 +0 .11)^12
C)1500/(1 + 11)^12
D)​1500

Quizplus · Accepted Answer

We need to use the present value formula which is:
Present Value = Future Value / (1 + r)n
where r is the interest rate and n is the number of years.

Plugging in the values, we get:
Present Value = 1500 / (1 + 0.11)12
Present Value = 1500 / 3.169865...
Present Value = $473.63 (rounded to the nearest cent)

So, the best choice is B.

​If the Interest Rate Is 11%,$1500 Received at the End

If the Interest Rate Is 11%,$1500 Received at the End