Calculating Present Value of Future Cash Flow

John is considering an investment that will pay him $50,000 in 5 years. He has a certain opportunity to invest in a project today that offers an annual rate of return of 8%. To determine whether he should invest in this opportunity instead of waiting for the $50,000, John needs to calculate the present value (PV) of the future cash inflow.

The formula for present value is given as:

$$PV = rac{FV}{(1 + r)^n}$$

where:

• $$FV$$ = Future Value ($50,000)
• $$r$$ = annual discount rate (8% or 0.08)
• $$n$$ = number of years (5)

Using this formula, what is the present value of the $50,000? Choose the closest answer.