Mordica Company will receive €200,000 in 7 years. If the appropriate interest rate is 10%, the present value of the €200,000 receipt is

Question

Quizplus · Accepted Answer

We need to calculate the present value of €200,000 received in 7 years at an interest rate of 10%. Using the formula for present value of a single cash flow: 
PV = FV / (1 + r)^t 
where PV is the present value, FV is the future value, r is the interest rate, and t is the number of years. 
Plugging in the values, we get: 
PV = 200,000 / (1 + 0.10)^7 
PV = €102,632 
Therefore, the present value of the €200,000 receipt is €102,632. Option B is the correct answer.

Mordica Company Will Receive €200,000 in 7 Years