The present value of $40,000 to be received in one year, at 6% compounded annually, is (rounded to nearest dollar)
A) $37,736
B) $42,400
C) $40,000
D) $2,400

Question

Quizplus · Accepted Answer

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

Plugging in the given values:
PV = 40,000/(1+0.06)^1
PV = 37,735.85

Rounding to the nearest dollar, the answer is $37,736. Therefore, the best choice is A.

The Present Value of $40,000 to Be Received in One