The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. The present value of $7,000 to be received in 7 years at 7% compounded annually is
A) $7,000
B) $3,430
C) $4,361
D) $6,657

Question

Quizplus · Accepted Answer

The present value is calculated using the present value factor from the tables for 7 years at 7%. The factor is approximately 0.623, and multiplying this by $7,000 gives $4,361.

The Solution to This Problem Requires Time Value of Money