Which one of the following is the correct formula for computing the present value of $600 to be received in 6 years? The discount rate is 7 percent. A)PV = $600 (1 + 6)⁷ B)PV = $600 (1 + 0.07)⁶ C)PV = $600 × (0.07 × 6) D)PV = $600/(1 + 0.07)⁶ E)PV = $600/(1 + 6)^0.07

Question

Quizplus · Accepted Answer

The correct formula for present value is PV = FV / (1+r)^n, where FV = future value, r = discount rate, and n = number of years. Plugging in the values given in the question, we get PV = $600 / (1+0.07)^6 = $379.08. Option D is the only choice that correctly uses this formula.

Which One of the Following Is the Correct Formula for Computing