Asked by Emmanuel Rojas on Jul 01, 2024
Verified
Using the tables above, what would be the present value of $8,000 to be received one year from today, assuming an earnings rate of 12%?
A) $7,544
B) $7,120
C) $7,272
D) $7,144
Present Value
The current worth of a future sum of money or stream of cash flow given a specified rate of return.
Compound Interest
The addition of interest to the principal sum of a loan or deposit, where interest also earns interest from that moment on.
Earnings Rate
The return on an investment or the rate at which a company or asset generates income, typically expressed as a percentage.
- Comprehend calculations of present value and future cash flows utilizing present value tables.
Verified Answer
PM
Prabh ManesJul 01, 2024
Final Answer :
D
Explanation :
To find the present value of $8,000 to be received one year from today at an earnings rate of 12%, we use the present value of $1 at 12% for 1 year from the first table, which is 0.893. Multiplying $8,000 by 0.893 gives $7,144.
Learning Objectives
- Comprehend calculations of present value and future cash flows utilizing present value tables.