Question

What is the present discounted value of $100 received 3 years from now? Assume the interest rate is 9% and that interest is paid once at the end of the year. A. 77 B. 89 C. $106 D. $130 E. $150

Answer 1

The correct answer is A.

Step-by-step explanation:

Giving the following information:

Principal= $100

number of years= 3

Interest rate= 9%

To calculate the present value we need to use the following formula:

Present Value= Final Value*(1+i)^n

PV= 100/(1+0.09)^3

PV= $77.22