Answer:
The correct option is b. $3,918.
Step-by-step explanation:
This can be calculated using the simple present value (PV) formula as follows:
PV = FV / (1 + r)^n ............................ (1)
Where;
PV = Present value of the amount = ?
FV = Future value of the amount = $5,000
r = Discount rate = 5%, or 0.05
n = number of years = 5
Substituting the values into equation (1), we have:
PV = $5,000 / (1 + 0.05)^5
PV = $5,000 / 1.05^5
PV = $5,000 / 1.2762815625
PV = 3,918
Therefore, the correct option is b. $3,918.