Question

If I will receive a payment of $121 two years from now and the annual interest rate is 10 percent, the present value of the payment is:

Answer 1

Answer:

$100

Explanation:

The present value of a cash flow can be found by discounting the cash flow at the annual interest rate.

The formula for finding present value can be found in the attached image.

The present value can be calculated using a financial calculator.

Cash flow in year one = 0

Cash flow in year two = $121

Discount rate = 10%

Present value = $100

I hope my answer helps you