Sheeley Company will receive $100,000 in a future year.If the future receipt is discounted at an interest rate of 10%, its present value is $51,316.In how many years is the $100,000 received?
A)5 years
B)6 years
C)7 years
D)8 years

Question

Quizplus · Accepted Answer

Using the present value formula: 
Present Value = Future Value / (1 + r)^n 
where r is the interest rate and n is the number of years. 
Plugging in the given values, we get: 
51316 = 100000 / (1 + 0.1)^n 
Simplifying, we get: 
(1.1)^n = 100000/51316 
Taking the natural logarithm on both sides, we get: 
n * ln(1.1) = ln(100000/51316) 
Solving for n, we get approximately 7. 
Therefore, the $100,000 will be received in 7 years.

Sheeley Company Will Receive $100,000 in a Future Year