What is the present value (PV) of $300,000 received seven years from now, assuming the interest rate is 9% per year? ..... A. $205,138 B. $287,193 C. $164,110 D. $180,000
What is the present value (PV) of $300,000 received seven years from now, assuming the interest rate is 9% per year? ..... A. $205,138 B. $287,193 C. $164,110 D. $180,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![**Question:**
What is the present value (PV) of $300,000 received seven years from now, assuming the interest rate is 9% per year?
**Options:**
- A. $205,138
- B. $287,193
- C. $164,110
- D. $180,000
**Explanation:**
To calculate the present value (PV) of a future sum of money, you can use the formula:
\[ PV = \frac{FV}{(1 + r)^n} \]
Where:
- \( FV \) is the future value ($300,000 in this case),
- \( r \) is the interest rate (9% or 0.09),
- \( n \) is the number of years (7 years).
Substitute the values into the formula to find the correct answer.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb6ea49f2-aec0-47e4-ae21-0e0a47907cd1%2Fb5e92d9e-9dd3-496a-9832-faa3ba54c87d%2F4a804nx_processed.png&w=3840&q=75)
Transcribed Image Text:**Question:**
What is the present value (PV) of $300,000 received seven years from now, assuming the interest rate is 9% per year?
**Options:**
- A. $205,138
- B. $287,193
- C. $164,110
- D. $180,000
**Explanation:**
To calculate the present value (PV) of a future sum of money, you can use the formula:
\[ PV = \frac{FV}{(1 + r)^n} \]
Where:
- \( FV \) is the future value ($300,000 in this case),
- \( r \) is the interest rate (9% or 0.09),
- \( n \) is the number of years (7 years).
Substitute the values into the formula to find the correct answer.
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