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

Question

Quizplus · Accepted Answer

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

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

Therefore, the best choice is A.

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