Which of the following equations is used to find present value?

The selected equation, which states that present value (PV) is equal to future value (FV) divided by (1 plus the interest rate) raised to the power of time (t), is the correct formula for calculating present value. This relationship captures the fundamental concept of time value of money, which asserts that a given amount of money today is worth more than the same amount in the future due to the potential earning capacity.

In this equation, (1 + r)^t represents the compound growth factor, which reflects how much an investment grows over time. To find the present value, we need to discount the future amount back to the present, which is why we divide FV by this factor. This process allows us to determine how much a future sum of money is worth today, which is crucial for investment and financial decision-making.

Understanding this relationship helps in evaluating investment opportunities, comparing cash flows at different times, and making informed financial choices.