What is the present value of $100 to be paid in 2 years at an interest rate of 10 percent?
Time Value of Money:
In the domain of finance, the idea of the time value of money is useful to derive the equivalent present worth of certain cash flow expected to occur in the future. The factors which influence the time value of money are the relevant interest rate, the interval of compounding, and the timing of cash flow.
Answer and Explanation:1
- The calculated present value of $100 to be paid in 2 years is $82.64.
The present value of the investment is given by:
{eq}\begin{align*}&= \dfrac{\text{Future amount}}{\text{(1 + annual interest rate)} ^ {\text{Number of years}}} \\[0.3 cm]&= \dfrac{\$100}{(1 + 10\%)^{2}}\\[0.3 cm]&= \dfrac{\$100}{(1.10)^{2}} \\[0.3 cm]&\approx \$82.64 \\[0.3 cm]\end{align*}{/eq}
FAQs
Therefore, If the interest rate is 10%, then the present value of $100 to be paid in 2 years is $83.
What is the future value of $100 at 10 percent simple interest for 2 years? ›
$121 is the future value of $100 in two years at 10%.
What is the present value of $100 in 10 years? ›
Future value (FV) is $100. Number of years (n) is 10 years. Opportunity cost (r) is 9%. Hence, the present value of $100 to be received 10 years from today is $42.241.
What's the present value of $100 to be received in 3 years if the interest rate is 4% annual compounding? ›
What's the present value of $100 to be received in 3 years if the interest rate is 4%, annual compounding? N = 3, I/YR = 4, PMT = 0, FV = 100, and then solve for PV = $88.90.
What is the present value of $500 to be paid in two years if the interest rate is 5? ›
$453.51. The future cash flow is $500, the interest rate is 5%, and the number of years covered is two years.
What is the present value of $100 in 2 years? ›
Answer and Explanation: The calculated present value of $100 to be paid in 2 years is $82.64.
What is the future value of $100 in 2 years time? ›
Answer and Explanation: The calculated future value of the investment in 2 years is $121.
What is the present value of $100 to be received in 2 years assuming an 8% discount rate? ›
Calculation Using the PV Formula
The answer, $85.73, tells us that receiving $100 in two years is the same as receiving $85.73 today, if the time value of money is 8% per year compounded annually. (“Today” is the same concept as “time period 0.”)
What is the present value of $100 with the 10% interest rate if received one year from now? ›
Present value is the value today of an amount of money in the future. If the appropriate interest rate is 10 percent, then the present value of $100 spent or earned one year from now is $100 divided by 1.10, which is about $91.
What is the present value of $100 expected two years from today at a discount rate of 6 percent? ›
PV = 100/(1.06^2) = 89.00.
Answer and Explanation:
Present Value = 1000 / 1.46 = $687.
What is the PV of $100 to be received in 3 years if the appropriate interest rate is 10 compounded annually? ›
Answer and Explanation:
The present value of $100 to be received in 3 years $75.13.
What is the present value of $250 to be paid in two years if the interest rate is 15? ›
Identify the given values which are: the cash flow (CF) to be paid in two years, which is $250, the annual interest rate (i), which is 15% or 0.15 when expressed as a decimal, and the number of years (n) which is 2. Answer : 1) PV = $250(P/F,15%,2) = $250(0.7561) = 189…
What is the present value of $1000 received in three years if the interest rate is 5? ›
Answer and Explanation: The present value (PV) is $863.84.
What is the present value of $100 to be received in 3 years assuming an 8% discount rate? ›
In this case, we want to find the present value of $100 that we will receive at the end of three years, with an 8% annual discount rate. The result is approximately $79.38. Hence, the present value of $100 received at the end of three years, assuming an annual 8% discount rate, is about $79.38.
How do I calculate present value? ›
The present value formula is PV=FV/(1+i)n, where you divide the future value FV by a factor of 1 + i for each period between present and future dates. Input these numbers in the present value calculator for the PV calculation: The future value sum FV.
What is future value of $100 invested at 10% simple interest for 3 years? ›
The future value of $100 at a 10% simple interest rate for 3 years is $130. This calculation uses the simple interest formula by multiplying the principal amount by the interest rate and the time period, resulting in a total simple interest of $30.
What is the future value of $100 invested at 10% compounded annually for 10 years? ›
Expert-Verified Answer
The future value of the $100 investment, compounded annually at a 10% interest rate for 10 years, is approximately $259.37. So, the investment of $100, compounded annually at a 10% interest rate over 10 years, is projected to grow to around $259.37 in the future.
How much is $100 at the end of each year forever at 10% interest worth today multiple choice question? ›
Answer and Explanation:
So, a $100 at the end of each year forever is worth $1,000 in today's terms.
What is the future value of $10.000 on deposit for 2 years at 6% simple interest? ›
Answer & Explanation
The future value of $10,000 on deposit for 2 years at 6% simple interest is $11,200.
