1. The chief financial officer of a home health agency needs to determine the present value of a $120,000 investment received at the end of year 5. What is the present value if the discount rate is?

PV= PV x (1+1) n.

One approach to calculating future value is to use the formula where PV is the present value (initial investment amount), i is the interest rate, and n is the number of time periods of the investment. This formula says that an investments worth in the future, FV, equals the investments present worth today, PV, multiplied by a factor, (1 + 1)n, that takes into account the compounded growth is interest over the lifetime of the investment.

1. 3 percent?
2. 6 percent?
3. 9 percent?
4. 12 percent?