The present value of $40,000 to be received in two years, at 12% compounded annually, is _____ (rounded to nearest dollar). Use the following table, if needed.
$$\begin{array}{l}
\text { Present value of } \$ 1 \text { at Compound Interest }\
\begin{array} { l l l l l l }
\text { Periods } & 5 \% & 6 \% & 7 \% & 10 \% & 12 \% \
1 & 0.95238 & 0.94340 & 0.93458 & 0.90909 & 0.89286 \
2 & 0.90703 & 0.89000 & 0.87344 & 0.82645 & 0.79719 \
3 & 0.86384 & 0.83962 & 0.81630 & 0.75132 & 0.71178 \
4 & 0.82270 & 0.79209 & 0.76290 & 0.68301 & 0.63552 \
5 & 0.78353 & 0.74726 & 0.71299 & 0.62092 & 0.56743 \
6 & 0.74622 & 0.70496 & 0.66634 & 0.56447 & 0.50663 \
7 & 0.71068 & 0.66506 & 0.62275 & 0.51316 & 0.45235 \
8 & 0.67684 & 0.62741 & 0.58201 & 0.46651 & 0.40388 \
9 & 0.64461 & 0.59190 & 0.54393 & 0.42410 & 0.36061 \
10 & 0.61391 & 0.55840 & 0.50835 & 0.38554 & 0.32197
\end{array}
\end{array}$$
A) $31,888
B) $48,112
C) $8,112
D) $40,000

Question

The present value of $40,000 to be received in two years, at 12% compounded annually, is _____ (rounded to nearest dollar). Use the following table, if needed. 
 $$\begin{array}{l}
\text { Present value of } \$ 1 \text { at Compound Interest }\
\begin{array} { l l l l l l } 
\text { Periods } & 5 \% & 6 \% & 7 \% & 10 \% & 12 \% \
1 & 0.95238 & 0.94340 & 0.93458 & 0.90909 & 0.89286 \
2 & 0.90703 & 0.89000 & 0.87344 & 0.82645 & 0.79719 \
3 & 0.86384 & 0.83962 & 0.81630 & 0.75132 & 0.71178 \
4 & 0.82270 & 0.79209 & 0.76290 & 0.68301 & 0.63552 \
5 & 0.78353 & 0.74726 & 0.71299 & 0.62092 & 0.56743 \
6 & 0.74622 & 0.70496 & 0.66634 & 0.56447 & 0.50663 \
7 & 0.71068 & 0.66506 & 0.62275 & 0.51316 & 0.45235 \
8 & 0.67684 & 0.62741 & 0.58201 & 0.46651 & 0.40388 \
9 & 0.64461 & 0.59190 & 0.54393 & 0.42410 & 0.36061 \
10 & 0.61391 & 0.55840 & 0.50835 & 0.38554 & 0.32197
\end{array}
\end{array}$$  
A) $31,888
B) $48,112
C) $8,112
D) $40,000

Quizplus · Accepted Answer

The present value of $40,000 to be received in two years at 12% compounded annually is calculated using the present value formula: PV = FV / (1 + r)^n, where FV is the future value, r is the annual interest rate, and n is the number of periods. According to the table, the present value factor for 12% over 2 periods is 0.79719. Therefore, the present value is $40,000 * 0.79719 = $31,887.6, which rounds to $31,888.

The Present Value of $40,000 to Be Received in Two