The present value of an amount can be represented as: A) PV = FVn[PVF_k,n]. B) PV = FVn[PVFA_k,n]. C) PV = FV_n[1 / (1 + k)ⁿ]. D) a and c

Question

Quizplus · Accepted Answer

The present value (PV) of a future amount (FV) is calculated using the formula PV = FVn[1 / (1 + k)^n], which is represented by choice C. Choice A is also correct because PVF_k,n is the present value factor, which is equivalent to 1 / (1 + k)^n.

The Present Value of an Amount Can Be Represented As