If You Want to Know the Present Value of $10,000

question 170

Multiple Choice

If you want to know the present value of $10,000 received a year from today, and the interest rate is 4 percent, what formula can you use?

• A)Present value equals $10,000 times 0.04.
• B)Present value equals $10,000 divided by 1.04
• C)Present value equals 1.04 divided by $10,000.
• D)Present value equals $10,000 times 1.04.

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Definitions:

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, charged by lenders to borrowers.

Federal Budget

An annual financial document used by a government to project its expected revenue and allocate funds to various expenses and programs.

Surpluses

Situations where the quantity of a good or service supplied exceeds the quantity demanded at a specific price, often resulting in excess stock.

Great Recession

A severe global economic downturn that took place from late 2007 through 2009, marked by significant declines in market and economic activity.