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You are promised that when you retire from your current job, in 40 years' time, you will receive a gold watch valued at $1 000. If you can invest money at 5% annual interest, what is the present worth of this promise?

Select one:


a. $142

b. $167

c. $211

d. $156

e. $231

Respuesta :

facundobuzzetti

Answer:

Present Value= $142

Explanation:

Giving the following information:

In 40 years, you will receive a gold watch valued at $1,000. The interest rate is 5%.

We have to calculate the value today of $1,000. To do this, we need to use the following formula:

PV= FV/ (1+i)^n

PV= 1,000 / (1.05)^40

PV= $142