Canadian Securities Course (CSC) Level 1 Practice Exam

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What is the formula for Present Value?

PV = FV * (1 + r)^n
PV = FV - r^n
PV = FV + r/n
PV = FV / (1 + r)^n

The correct answer is: PV = FV / (1 + r)^n

The correct formula for Present Value is D. PV = FV / (1 + r)^n. This formula represents the calculation of the present value of a future sum of money, where PV is the present value, FV is the future value, r is the discount rate, and n is the number of periods into the future. This formula takes into account the impact of discounting future cash flows back to the present value using the discount rate. Options A, B, and C are incorrect because they do not accurately represent the concept of Present Value and the relationship between present value, future value, discount rate, and time.