Which of the Following Is the Formula to Calculate the Discounted

question 7

Multiple Choice

Which of the following is the formula to calculate the discounted value of a single payment received in the future?

• A) FV ÷ (1 + i)ⁿ
• B) PV  (1 + i)ⁿ
• C) FV  (1 - (1 ÷ (1 + i)ⁿ) ÷ i
• D) PV  ((1 + i)ⁿ - 1) ÷ i

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Definitions:

Addition

A mathematical operation that represents the total sum of two or more numbers.

Multiplication

A mathematical operation that calculates the total of one number added to itself a certain number of times based on another number.

Addition

The mathematical process of combining two or more quantities to get a sum.

Exponentiation

A mathematical operation involving two numbers, the base and the exponent, where the base is raised to the power of the exponent.