Present and future value tables of $1 at 9% are presented below.

-An investment product promises to pay $42,000 at the end of 10 years. If an investor feels this investment should produce a rate of return of 12%, compounded annually, what's the most the investor should be willing to pay for the investment?
A) $15,146.
B) $13,523.
C) $42,000.
D) $130,446.

Question

Present and future value tables of $1 at 9% are presented below.

-An investment product promises to pay $42,000 at the end of 10 years. If an investor feels this investment should produce a rate of return of 12%, compounded annually, what's the most the investor should be willing to pay for the investment?
A) $15,146. 
B) $13,523. 
C) $42,000. 
D) $130,446.

Quizplus · Accepted Answer

$42,000 × 0.32197* = $13,523 (rounded)
*PV of $1: n = 10; i = 12%

Present and Future Value Tables of $1 at 9% Are