What is the present value (PV)of $50,000 received 20 years from now,assuming the interest rate is 4% per year?
A)$5,242.88
B)$10,000.00
C)$22,819.35
D)$40,000.00

Question

Quizplus · Accepted Answer

PV = FV / (1 + r) ^ n 
where PV is present value, FV is future value, r is interest rate per year, and n is the number of years.

In this case, 
FV = $50,000 
r = 4% per year 
n = 20 years

Substituting these values in the formula, we get 
PV = $50,000 / (1 + 0.04) ^ 20 
PV = $22,819.35

Therefore, the present value of $50,000 received 20 years from now, assuming the interest rate is 4% per year, is $22,819.35. 
Option C is the best choice.

What Is the Present Value (PV)of $50,000 Received 20 Years