What is the value in year 3 of a $10,000 cash flow made in year 20 if interest rates are 5 percent?
A) $4,362.97
B) $4,491.27
C) $5,374.11
D) $5,572.19

Question

Quizplus · Accepted Answer

To find the value in year 3 of a $10,000 cash flow made in year 20 when interest rates are 5 percent, we need to discount the cash flow back 17 years (from year 20 to year 3). The formula for the present value of a future cash flow is PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the interest rate, and n is the number of periods. Plugging in the values, we get PV = $10,000 / (1 + 0.05)^17, which equals approximately $4,362.97.

What Is the Value in Year 3 of a $10,000