Present Value of 1 Future Value of 1 Present Value of an Annuity of 1 Future Value of an Annuity of 1 A company is considering investing in a project that is expected to return $350,000 four years from now.How much is the company willing to pay for this investment if the company requires a 12% return?
A)$55,606
B)$137,681
C)$222,425
D)$265,764
E)$350,000

Question

Present Value of 1  Future Value of 1  Present Value of an Annuity of 1  Future Value of an Annuity of 1  A company is considering investing in a project that is expected to return $350,000 four years from now.How much is the company willing to pay for this investment if the company requires a 12% return?
A)$55,606 
B)$137,681 
C)$222,425 
D)$265,764 
E)$350,000

Quizplus · Accepted Answer

Using the formula for future value of a single amount:

FV = PV * (1 + r)^n

where FV is future value, PV is present value, r is the interest rate, and n is the number of periods.

We can solve for PV:

PV = FV / (1 + r)^n

Plugging in the values given in the problem:

PV = 350,000 / (1 + 0.12)^4

PV = 222,425

Therefore, the company is willing to pay $222,425 for this investment if they require a 12% return. The correct answer is C.