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Question:

What is the present value of $8,000 after three years if the current interest rate is 7 percent? Assume all options are rounded to the nearest whole.

A $6,532
explanation

To calculate the present value of 8,000 dollars after three years with a 7% interest rate, we can use the present value formula:
PV = FV / \((1 + r)^n\)
where PV is the present value, FV is the future value, r is the interest rate, and n is the number of periods.
In this case, FV is 8,000 dollars, r is 7%, and n is 3 years. Plugging these values into the formula, we get:
PV = 8,000 / \((1 + 0.07)^3\)
= 8,000 / 1.225
= 6,531.71
Therefore, the present value of $8,000 after three years at a 7% interest rate is approximately 6,532 dollars.

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