David invests $50,000 in a bond that pays no interest over 10 years. During this time, inflation is constant at 2.5% per year. What will the present value of the $50,000 investment be at the end of the 10 years? Use this formula to calculate the present value while accounting for inflation: present value is equal to the fraction with numerator future value and denominator open paren 1 plus annual inflation rate close paren to the number of years th power
A
64 dollars comma 004 point 2 8B
50 dollars comma 000 point 0 0C
45 dollars comma 000 point 0 0Use the inflation-adjusted present value formula: $50,000 ÷ (1 + 0.025)^10. The inflation factor is about 1.28008, so $50,000 ÷ 1.28008 ≈ $39,059.92. Therefore, the present value is $39,059.92, choice C.
AI-written and checked against the verified answer.