Given below are the present value factors for $1.00 discounted at 10% for one to five periods. Each of the items 52 to 55 is based on 10% interest compounded annually.
-If an individual put $4,000 in a savings account today, what amount of cash would be available two years from today?
A)$4,000 × 0.826
B)$4,000 × 0.826 × 2
C)$4,000 ÷ 0.826
D)$4,000 ÷ 0.909 × 2

Question

Given below are the present value factors for $1.00 discounted at 10% for one to five periods. Each of the items 52 to 55 is based on 10% interest compounded annually. 
-If an individual put $4,000 in a savings account today, what amount of cash would be available two years from today?
A)$4,000 × 0.826 
B)$4,000 × 0.826 × 2 
C)$4,000 ÷ 0.826 
D)$4,000 ÷ 0.909 × 2

Quizplus · Accepted Answer

The correct choice is C because it implies the calculation of future value using a discount factor. The factor 0.826 suggests a present value calculation, so dividing by it gives the future value.

Given Below Are the Present Value Factors for $1