What is the present value of $1,000 to be received in two years if the current market interest rate is 8.0%?
A)$481
B)$556
C)$857
D)$926

Question

What is the present value of $1,000 to be received in two years if the current market interest rate is 8.0%?
A)​$481
B)​$556
C)​$857
D)​$926

Quizplus · Accepted Answer

The present value (PV) of $1,000 to be received in two years at an 8.0% interest rate can be calculated using the formula PV = FV / (1 + r)^n, where FV is the future value ($1,000), r is the annual interest rate (0.08), and n is the number of years (2). Plugging in the numbers: PV = $1,000 / (1 + 0.08)^2 = $1,000 / 1.1664 = $857 (approximately).

What Is the Present Value of $1,000 to Be Received