If interest rates are 8.21% per annum,compounded annually,the present value of $31 000 received at the end of three years is:
A) $2819.17
B) $9549.33
C) $24 465.80
D) $28 647.99

Question

Quizplus · Accepted Answer

Using the formula for present value of a lump sum:

PV = FV/(1+r)^n

where PV is present value, FV is future value, r is the interest rate per period, and n is the number of periods.

In this problem, FV = $31,000, r = 8.21%, and n = 3.

Plugging in the values:

PV = $31,000/(1+0.0821)^3 = $24,465.80

Therefore, the answer is C.

If Interest Rates Are 8