What Is the Present Value of $100 Two Years from Now

question 370

Multiple Choice

What is the present value of $100 two years from now at an interest rate of 5%?

• A) $105
• B) $95.24
• C) $90.70
• D) $5

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Definitions:

Bonds Payable

represent long-term debt securities issued by corporations or governments, obligating the issuer to pay the bondholder the principal plus interest.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, reflecting the interest payments on its debt.

Issuing Bonds

The process by which a corporation or government raises funds by selling debt securities to investors.

Tax Savings

Reductions in income tax obligations as a result of deductions, credits, or other allowances.