Which of the Following Equations Shows How We Can Compute

question 158

Multiple Choice

Which of the following equations shows how we can compute the value today (P₀) of an amount (P₁) that will be paid a year hence?

• A) P₀(1+r) = P₁
• B) P₀ = P₁/ (1+r)
• C) P₀ = Pn/(1+r)ⁿ⁻¹
• D) none of the above are correct.