Question

If the interest rate is 3% and a total of $4,370.91 will be paid to you at the end of 3 years, what is the present value of that sum?

A) $3900, B) $3947 C) $3,977.40 D) $4000

Answer 1

D) $4000

Step-by-step explanation:

Assuming P = 1, value at 3% at the end of 3 years =

1 X 1.03^3 = 1.092727.

For value of 1.092727, P = 1.

For value of $4370.91, P =

(4370.91 X 1)÷ 1.092727 = 4000.

Present value = $4000.

Answer 2

The correct answer among all the other choices is C) $3,977.40. This is the present value of the sum if the interest rate is 3% and a total of $4,370.91 will be paid to you at the end of 3 years. Thank you for posting your question. I hope this answer helped you. Let me know if you need more help.