If you want to know the present value of $4,000 in two years and the annual interest rate is 5%, what formula can you use?
A) Present value = $4,000 / (0.05 ) × 2.
B) Present value = $4,000 / (1 + 0.05 )2.
C) Present value = $4,000 × (1 + 0.05 )2.
D) Present value = $4,000 × (1 + 0.05 )/ 2.
B
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