. What is the present value of an investment earning 4% annual interest, compounded annually,it at the end of 10 years the investment is worth 16250 a. 10977.92 b. 10935.78 C. 10914.36 d. 10899.95

The question deals with the concept of present value in financial mathematics. Given that 4% is the interest rate, and the value of the investment 10 years from now is $16250, we can calculate the initial amount at time=0 using the formula of future value in an annual compound interest setting which is <br />FV = PV*(1+ r/n)^(nt)<br />Here, FV = Future Value, PV = Present Value, r = annual interest rate (in decimal):<br />r = 4/100 = 0.04<br />n = number of times interest applied per time period; annually, n is 1<br />t = time the money is invested for; t is 10.<br />Put the values.<br /><br />16250 = PV * ( 1 + 0.04)^(10)<br /><br />Rearranging the above equation, we get,<br /><br />PV = 16250 / ( 1 + 0.04)^(10)<br /><br />From the options a, b, c, and d, one corresponds to value obtained from above calculation