The present value of $10,000 discounted at 5% per year and received at the end of 5 years is A) $10,000/1.25 B) $10,000(1.05)⁵ C) $10,000/(1.05)⁵ D) $10,000 (1.05)^1/5

Question

Quizplus · Accepted Answer

The present value of $10,000 discounted at 5% per year for 5 years can be 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 periods.

So, PV = $10,000/(1+0.05)^5 = $7,782.45.

Therefore, the best choice is C, which is $10,000/(1.05)^5, since it is the only option that matches the correct formula for present value calculation.

The Present Value of $10,000 Discounted at 5% Per Year