header bg

Question:

What is the present value of $8,000 received three years from the present using a 7 percent interest rate? Assume all answer choices are rounded to the nearest whole dollar.

A $6,530
Explaination

The formula for present value is PV = FV / (1 + i)n. Plugging in the information from the question, the formula becomes $8,000 / (1 + .07)3 = $6,530.