Using the present value long-hand method,how much money would need to be deposited to earn $5,000 in five years with a 5% interest rate compounded annually?
A)$3,917.63
B)$3,917.00
C)$3,918.63
D)$3,918.00

Question

Quizplus · Accepted Answer

The present value (PV) formula is PV = FV / (1 + r)^n, where FV is the future value ($5,000), r is the annual interest rate (5% or 0.05), and n is the number of periods (5 years). Plugging these values in gives PV = $5,000 / (1 + 0.05)^5 = $3,917.63.

Using the Present Value Long-Hand Method,how Much Money Would Need