What Is the Present Value of $100 One Year from Now

question 2

Multiple Choice

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

• A) $5
• B) $95.24
• C) $100
• D) $105

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Definitions:

Fair Value

An estimate of the market value of an asset or liability based on current prices in active markets for similar assets or liabilities.

Lessee

A Lessee is a person or entity who leases an asset from another, the lessor, under a lease agreement.

Lessor

A lessor is the party that leases or rents a property or asset to another party, known as the lessee.

Capital Lease

A lease arrangement that is recorded as an asset on the lessee's balance sheet, essentially treated as a purchase of the leased asset for accounting purposes.