**Present Value Calculation Multiple Choice****Question:**If the interest rate is 3 percent, the present value of $900 received at the end of four years is:**Options:**- **Option A:** $792.00- **Option B:** $799.64- **Option C:** $873.79- **Option D:** $927.40**Instructions:**Select the correct answer from the options provided. Calculate the present value using the formula:\[ PV = \frac{FV}{(1 + r)^n} \]Where:- $ PV $ is the present value- $ FV $ is the future value ($900)- $ r $ is the interest rate (0.03)- $ n $ is the number of years (4)

here we calculate the present value and choose the correct option so the calculation of the following by using the given data as follow-b) $799.64 because , Present value of an amount received at the end of n years can be calculated by the formula : Present Value =[A/(1+r)n] Here A = Amount received = $900 r = Interest rate = 3% = 0.03 n = number of years = 4 Now we put the values in the formula - Present Value = $900 / (1 + 0.03)4 Present Value = $799.64 so here we conclude that Present value is $799.64 Hence we conclude that here only Option b) $799.64 as per calculation other options are incorrect!!

Answered: If the interest rate is 3 percent, the…

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Economics

If the interest rate is 3 percent, the present value of $900 received at the end of four years is: Multiple Choice O $792.00. $799.64.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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