Suppose your bank account will be worth $4,200.00 in one year. The interest rate (discount rate) that the bank pays is 5%. What is the present value of your bank account today?

To calculate the present value of your bank account today, you need to discount the future value by the interest rate. The formula to calculate present value is:

Present Value = Future Value / (1 + Interest Rate)^Number of Periods

In this case, the future value is $4,200.00 and the interest rate is 5%. We assume there is only one period (one year). So let's calculate:

Present Value = $4,200.00 / (1 + 0.05)^1

Now, let's simplify the equation:

Present Value = $4,200.00 / (1.05)^1
Present Value = $4,200.00 / 1.05
Present Value = $4,000.00

Therefore, the present value of your bank account today is $4,000.00.