With an interest rate of 6 percent, the present value of $100 next year is approximately?

Solution:

Future value of an Investment at r% for n years is given by:

Future Value = Present Value (1 + r/100)ⁿ

Therefore the present value of a future value is given as

Present Value = Future Value/(1 + r/100)ⁿ

If r = 6% and n = 1. Here r becomes the discounting rate.

Present Value = 100/(1 + 6/100)¹

= 100/(1.06)¹

= 94.339

= $94.339

With an interest rate of 6 percent, the present value of $100 next year is approximately?

Summary:

The present value of $100 next year at 6% is $94.339.