With an interest rate of 6 percent, the present value of $100 next year is approximately A. $106. B. $100. C. $94. D. $92. | Homework.Study.com (2024)

Business Finance Net present value

Question:

With an interest rate of 6 percent, the present value of $100 next year is approximately

A. $106.

B. $100.

C. $94.

D. $92.

Present Value:

The present value of a future cash flow is the cash flow's worth when it occurs today. The cash flow's present value depends on the period, the discounted interest rate, and the number of years covered.

Answer and Explanation:1

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The "present value next year" is a misnomer. $100 today at 6% interest is worth $100 * 1.06 = $106 next year. The present value of an amount...

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With an interest rate of 6 percent, the present value of $100 next year is approximately A. $106. B. $100. C. $94. D. $92. | Homework.Study.com (1)

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How to Calculate Present Value of an Investment: Formula & Examples

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Chapter 24/ Lesson 15

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Calculating the present value of an investment tells how much money needs to be saved now in order to reach a desired, future amount. Explore the definition of and formula for the present value of an investment, and see examples.

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With an interest rate of 6 percent, the present value of $100 next year is approximately A. $106. B. $100. C. $94. D. $92. | Homework.Study.com (2024)

FAQs

What is the present value of 100 next year at 6 percent? ›

Summary: The present value of $100 next year at 6% is $94.339.

What is the present value of 100$ next year if interest rate is 10%? ›

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. This simple example illustrates the general truth that the present value of a future amount is less than that actual future amount.

What is the FV of $100 in 2 years if the interest rate is 10% per year? ›

$121 is the future value of $100 in two years at 10%.

How much is $100 at 10 percent interest at the end of each year forever worth today? ›

When a stream of income is expected to be earned indefinitely, the present value of such income is calculated using the present value perpetuity factor. So, a $100 at the end of each year forever is worth $1,000 in today's terms.

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 is the future value of $100 received today and deposited at 6 percent for 4 years? ›

Therefore, the future value of $100 received today is approximately closest to $126.

What would the future value of $100 be after 5 years at 10% compound interest? ›

The $100 investment becomes $161.05 after 5 years at 10% compound interest.

What is the future value of $1000 after 5 years at 10% per year? ›

If a $1,000 investment is held for five years in a savings account with 10% simple interest paid annually, the FV of the $1,000 equals $1,000 × [1 + (0.10 x 5)], or $1,500.

What would be the value of 100$ after 10 years if you earn 11 percent interest per year? ›

What would be the value of $100 after 10 years if you earn 11 percent interest per year? Amount = 100 + 110 = $210.

What is the future value of $10,000 on deposit for 2 years at 6% simple interest? ›

The future value of $10,000 on deposit for 2 years at 6% simple interest is $11200.

What is the present value of $100 for 20 years at 10 percent per year? ›

Expert-Verified Answer

The present value of $100 each year for 20 years at 10% per year is (B) $851.36. Therefore, the present value of all the payments is approximately (B) $851.36.

What is the present value of $100 in 1 year if the interest rate is 5%? ›

The present value of $100 received one year from now, if the interest rate is 5%, can be calculated using the formula:Present Value = Future Value / (1 + Interest Rate)So, the present value of $100 received one year from now is $100 / (1 + 0.05) = $95.24.

How long will it take to double $1000 at 6% interest? ›

This means that the investment will take about 12 years to double with a 6% fixed annual interest rate.

What is the value of a $100 perpetuity if interest is 7%? ›

The formula to calculate the present value of a perpetuity is: Present Value = Cash Flow / Interest Rate In this case, the cash flow is $100 and the interest rate is 7%. Present Value = $100 / 0.07 = $1428.57 Therefore, the present value of a $100 perpetuity at an interest rate of 7% is $1428.57.

How much is $10000 for 5 years at 6 interest? ›

Summary: An investment of $10000 today invested at 6% for five years at simple interest will be $13,000.

What would the future value of $100 be after 5 years? ›

The future value of $100 invested at 10% compound interest for 5 years would be $161.05.

How much is 1000 worth at the end of 2 years if the rate of 6% is compounded daily? ›

Hence, if a two-year savings account containing $1,000 pays a 6% interest rate compounded daily, it will grow to $1,127.49 at the end of two years.

What is the present value of $100 for one year in the future at 5? ›

The present value of $100 received one year from now, if the interest rate is 5%, can be calculated using the formula:Present Value = Future Value / (1 + Interest Rate)So, the present value of $100 received one year from now is $100 / (1 + 0.05) = $95.24.

What is the present value of a 3 year annuity of $100 if the discount rate is 6? ›

Expert-Verified Answer

The present value of a 3-year annuity of $100 is $268.46 when the discount rate is 6%. If the first payment is delayed by 2 years instead of 1 year, the present value would be $174.12. where PV is the present value, CF1, CF2, CF3 are the cash flows in each year, and r is the discount rate.

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