What is the present value of a payment of $100 to be made one year from today?
A) $100*(1 + r)
B) $100/(1 + r)
C) $100 - $100 r
D) $100 - (1 + r)/$100

Question

What is the present value of a payment of $100 to be made one year from today?
A) $100*(1 + r) 
B) $100/(1 + r) 
C) $100 - $100 r 
D) $100 - (1 + r)/$100

Quizplus · Accepted Answer

The present value formula is PV = FV/(1+r), where PV is the present value, FV is the future value, and r is the interest rate. Since the payment of $100 is to be made one year from today, we need to discount it back to the present using the formula PV = FV/(1+r). Therefore, the present value of the payment is $100/(1+r). Hence, the correct choice is B.

What Is the Present Value of a Payment of $100