If the interest rate is 10%, the present value of $100 to be paid in two years is A)$100/1.1. B)$100/1.1². C)$80. D)$121.

Question

Quizplus · Accepted Answer

The present value of $100 to be paid in two years at an interest rate of 10% is calculated using the formula PV = FV / (1 + r)^n, where PV is the present value, FV is the future value ($100), r is the interest rate (10% or 0.1), and n is the number of periods (2 years). Therefore, the present value is $100 / (1.1)^2.

If the Interest Rate Is 10%, the Present Value of $100