If the interest rate is 10%, then the present value of $100 to be paid in 2 years is A. $80. B. $83. C. $120. D. $121. | Homework.Study.com (2024)

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Business Finance Net present value

Question:

If the interest rate is 10%, then the present value of $100 to be paid in 2 years is

A. $80.

B. $83.

C. $120.

D. $121.

Present Value:

Present value is generally the current value of a sum or total value of money of an amount which is due in a future time. The interest rate and total time flow of the series are the main factors that affect the present value of an amount.

Answer and Explanation:1

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Option B ($83) is the correct answer.

The present value can be calculated using the formula,

{eq}\begin{align*}PV &= \dfrac{c}{{{{\left( {1 + r}...

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Net Present Value | NPV Calculations, Formula & Examples

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