What is the present value of a payment of $250 one year from today if the interest rate is 4 percent?
A)$240.38
B)$242.24
C)$244.40
D)None of the above are correct to the nearest cent.

Question

Quizplus · Accepted Answer

The present value of a payment is calculated by dividing the payment amount by 1 plus the interest rate, raised to the power of the number of years until the payment is received. In this case, the present value would be $250 divided by (1+0.04)^1, which equals $240.38 (rounded to the nearest cent). Therefore, the correct answer is A.

What Is the Present Value of a Payment of $250