What is the present value of $1,000 due in 10 years if interest is compounded annually at 10%?

Question:

Present Value of Investment:

The present value of an expected cash flow is governed by the relevant discount rate and timing of the expected cash flow. An investment is only accepted when the present value is more than the current cost or investment.

Answer and Explanation:1

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The calculated present value of $1,000 due in 10 years is $385.54.

The present value of the investment is given by:

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What is the present value of $1,000 due in 10 years if interest is compounded annually at 10%? | Homework.Study.com (2024)