Given below are the present value factors for $1.00 discounted at 10% for one to five periods. Each of the items 52 to 55 is based on 10% interest compounded annually.
-What is the present value today of $6,000 to be received six years from today?
A)$6,000 × 0.909 × 6
B)$6,000 × 0.751 × 2
C)$6,000 × 0.621 × 0.909
D)$6,000 × 0.683 × 3

Question

Given below are the present value factors for $1.00 discounted at 10% for one to five periods. Each of the items 52 to 55 is based on 10% interest compounded annually. 
-What is the present value today of $6,000 to be received six years from today?
A)$6,000 × 0.909 × 6 
B)$6,000 × 0.751 × 2 
C)$6,000 × 0.621 × 0.909 
D)$6,000 × 0.683 × 3

Quizplus · Accepted Answer

To calculate the present value of a future amount, we need to use the present value formula and discount the future amount back to the present. The formula is: Present Value = Future Value / (1 + r)^n, where r is the discount rate and n is the number of years. In this case, we need to discount $6,000 back to the present, which means n = 6, and we need to use a discount rate (r) of 9%. Therefore, the calculation is: Present Value = $6,000 / (1 + 0.09)^6 = $3,247.51. The only answer that is close to this amount is C, which is $6,000 × 0.621 × 0.909 = $3,247.89.

Given Below Are the Present Value Factors for $1