Using a discount rate of 10 percent, the present value of a $2,500 benefit received five years from now is $1,552.30.

Question

Quizplus · Accepted Answer

The present value of a future benefit is calculated using the formula 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. In this case, PV = $1,552.30, FV = $2,500, r = 10%, and n = 5. Plugging these values into the formula, we get $1,552.30 = $2,500 / (1 + 0.1)^5, which is true.

Using a Discount Rate of 10 Percent, the Present Value