Answer to Question #169651 in Economics for Hasna

Question

Calculate the present value of the future returns of the project if the interest rate is 10%?

Answer 1

There is the following relationship between the present value of the future returns and future value:

$$FV=PV(1+r)^n,$$

here, $PV$ is present value, $FV$ future value, $r=10\%$ is the interest rate, $n$ time in years.

Then, from this formula we can find the present value of the future returns:

$$PV=\dfrac{FV}{(1+r)^n}.$$