Delaney invests $30,000 in a fixed deposit account that pays no interest over 4 years. During this period, inflation averages 4% per year. What will the present value of the $30,000 investment be at the end of the 4 years? Use this formula to calculate the present value while accounting for inflation: present value=(future value)/((1+annual inflation rate)^number of years)
A
30 dollars comma 000 point 0 0B
25 dollars comma 000 point 0 0Use the present value formula with a future value of $30,000, an annual inflation rate of 0.04, and 4 years: $30,000 ÷ (1.04)^4. Since (1.04)^4 ≈ 1.16986, the present value is about $25,644.13. The correct choice is B, $25,644.13.
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