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? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.) A) $55,606 B) $350,000 C) $222,425 D) $137,681 E) $265,764

Question

Quizplus · Accepted Answer

To calculate the present value of the investment, we can use the formula: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the required rate of return, and n is the number of years.

Substituting the given values, we get:
PV = 350,000 / (1 + 0.12)^4
PV = 350,000 / 1.5735
PV = $222,425 (rounded to the nearest dollar)

Therefore, the company should be willing to pay up to $222,425 for this investment to earn a 12% return. The correct choice is C.

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