The variables in a present value of a lump sum problem include all of the following, except:

• A. Number of Periods (n)
• B. Interest Rate (r)
• C. Future Value (FV)
• D. Periodic Payment (PMT)

Answer: (D)

Verified step by step guidance

1. Understand the concept of the present value of a lump sum: It refers to the current worth of a single future payment or amount, discounted at a specific interest rate over a given number of periods.
2. Identify the key variables involved in the calculation of the present value of a lump sum. These include: Number of Periods (n), Interest Rate (r), and Future Value (FV).
3. Recognize that the formula for the present value of a lump sum does not include Periodic Payment (PMT). The formula is typically expressed as: $P_V=F_V\times {(1+r)}^{-}$
4. Clarify that Periodic Payment (PMT) is a variable used in annuity problems, not in lump sum problems. An annuity involves a series of equal payments made at regular intervals, whereas a lump sum is a single payment.
5. Conclude that the correct answer is Periodic Payment (PMT), as it is not relevant to the present value of a lump sum calculation.