Question

You have received a settlement offer from an automobile manufacturer due to mechanical problems with your automobile. The manufacturer will pay you $ 19 comma 000 in one lump sum ten years from now. You can earn 8​% on your investments. The present value of the​ manufacturer's settlement offer is closest to ​(If using present value​ tables, use factor amounts rounded to three decimal​ places, X.XXX. Round your final answer to the nearest whole​ dollar.) LOADING...​(Click the icon to view Present Value of​ $1 table.) LOADING...​(Click the icon to view Present Value of Ordinary Annuity of​ $1 table.) A. $ 8 comma 797. B. $ 19 comma 000. C. $ 41 comma 020. D. $ 17 comma 480

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You have received a settlement offer from an automobile manufacturer due to mechanical problems with your automobile. The manufacturer will pay you $19,000 in one lump sum ten years from now. You can earn 8% on your investments. The present value of the manufacturer's settlement offer is closest to (If using present value tables, use factor amounts rounded to three decimal places, X.XXX. Round your final answer to the nearest whole dollar.) (Click the icon to view Present Value of $1 table.) 5 (Click the icon to view Present Value of Ordinary Annuity of $1 table.) O A. $8,797. O B. $19,000. OC. $41,020. OD. $17,480 i Present Value of $1 - X i Present Value of Ordinary Annuity of $1 Present Value of $1 7% 8% Present Value of Ordinary Annuity of $1 6% 7% 8% 10% Periods 4% 5% 12% 14% 16% Periods 4% 5% 6% 10% 12% 14% 16% 0.962 10.952 0.943 0.935 0.926 0.925 0.907 0.890 0.873 0.857 0.889 0.864 0.840 0.816 0.794 0.855 0.823 0.792 0.763 0.735 0.822 0.784 0.747 0.713 0.681 0.790 0.746 0.705 0.666 0.630 0.760 0.711 0.665 0.623 0.583 0.731 0.677 0.627 | 0.582 0.540 0.703 0.6450.592 0.544 0.500 0.676 0.614 0.558 0.508 0.463 0.650 0.585 0.527 0.475 0.429 0.625 0.557 | 0.497 0.444 0.397 0.601 | 0.530 0.469 0.415 0.368 0.577 0.505 0.442 0.388 0.340 15 0.555 0.481 0.417 | 0.362 0.315 | 0.394 0.339 0.292 17 0.5130.436 0.371 0.3170.270 0.494 | 0.416 0.350 0.296 0.250 190.475 0.396 0.331 0.277 0.232 0.456 0.377 0.312 0.258 0.215 0.9090.893 0.877 0.862 0.826 0.797 0.769 0.743 0.751 0.712 0.675 | 0.641 0.683 0.636 0.592 | 0.552 0.621 0.567 | 0.519 | 0.476 0.564 0.507 0.456 0.410 0.513 0.452 0.400 0.354 0.467 0.404 0.351 0.305 0.424 0.361 0.308 0.263 0.386 0.322 0.270 0.227 0.350 0.287 0.237 0.195 | 0.319 0.257 0.208 0.168 0.290 | 0.229 0.182 0.145 0.263 0.205 0.160 0.125 0.239 0.183 0.140 0.108 0.218 0.163 0.123 | 0.093 0.1980.146 0.1080.080 0.180 0.1300.095 0.069 0.164 0.116 0.0830.060 0.149 0.104 0.073 0.051 0.962 0.952 0.943 0.935 0.926 0.909 0.893 0.877 0.862 1.886 1.859 1.833 1.8081.783 1.736 1.6901.647 1.605 2.775 2.723 2.673 2.624 2.577 | 2.487 2.402 2.322 2.246 | 3.630 | 3.546 | 3.465 3.3873.312 3.1703.037 2.914 2798 4.452 4.329 4.212 4.100 | 3.993 3.791 3 605 3.433 3.274 5.242 5.076 4.917 4.767 4.623 | 4.355 14.1111 3.889 3.685 6.002 5.786 5.5825.389 5.206 | 4.868 4.564 | 4.288 4.039 6.733 6.463 6.210 5.971 5.7475.335 4.968 4.639 | 4.344 7.435 7.108 6.802 6.515 6.247 5.759 5.328 4.9464.607 8.1117.722 7.360 7.024 6.710 6.145 5.650 5.216 4.833 8.760 8.3067.8877.499 7.139 6.495 5.938 5.453 5.029 12 9.3858.8638.384 7.943 753668146 .1945.660 5.197 139 .986 9.394 8.853 8.358 7.904 7.103 6.424 | 5.842 5.342 14 10.563 9.899 9.295 8.745 8.244 7.367 | 6.628 6.002 | 5.468 15 11.118 10.380 9.712 9.108 8.559 7.606 6.811 6.142 5.575 16 11.652 10.838 10.106 9.447 8.8517.824 | 6.9746.265 5.668 12.166 11.274 10.477 9.763 9.122 7.120 6.373 5.749 12.659 11.690 10.828 10.059 9.372 8.201 7.250 6.467 5.818 13.134 12.085 11.158 10.336 9.604 8.365 7.3666 .550 5.877 20 13.590 12.462 11.470 10.594 9.818 8.514 7.4696.623 5.929 Print Print [Done] Print Done Done

Answer 1

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We know A=P*(1+i)^n
A=	19000
P=	?
i= 8%=	0.08
n=	10
A=P*(1+i)^n
19000=	P(1+.08)^10
19000=	P(1.08)^10
19000=	P*2.159
P=	19000/2.159
P=	8800.371
So answer is $ 8,797 approx.
Option A