Using a discount rate of 12%,the present value of a $50,500 benefit received 2 years from now is $39,859.69.

Question

Quizplus · Accepted Answer

Using the formula for present value:
Present Value = Future Value / (1 + Discount Rate)^Number of Years
$39,859.69 = $50,500 / (1 + 0.12)^2
Solving for the future value:
$50,500 = $39,859.69 x (1 + 0.12)^2
$50,500 = $39,859.69 x 1.2544
$50,500 = $50,076.18
Therefore, the statement is false. The present value of a $50,500 benefit received 2 years from now using a 12% discount rate is $39,859.69.

Using a Discount Rate of 12%,the Present Value of a $50,500