1. The present value of $40,000 to be received in one year, at 6% compounded annually, is (rounded to nearest dollar)
$37,736
$42,400
$40,000
$2,400
2. The present value of $30,000 to be received in two years, at 12% compounded annually, is (recorded to nearest dollar)
$37,736
$37,632
$23,700
$30,700
(1)-Present value of $40,000 to be received in one year, at 6% compounded annually
Future Value = $40,000
Annual Interest Rate (r) = 6% per year
Number of years (n) = 1 Year
Therefore, the Present Value = Future Value / (1 + r)n
= $40,000 / (1 + 0.06)1
= $40,000 / 1.06
= $37,736
“Present Value = $37,736”
(2)-Present value of $30,000 to be received in two years, at 12% compounded annually
Future Value = $30,000
Annual Interest Rate (r) = 12% per year
Number of years (n) = 2 Years
Therefore, the Present Value = Future Value / (1 + r)n
= $30,000 / (1 + 0.12)2
= $30,000 / 1.2544
= $23,916
“Present Value = $23,916”
The correct answer choice is $23,916, but it’s not listed in the answer choices
1. The present value of $40,000 to be received in one year, at 6% compounded annually,...
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