Items 69 through 72 apply to the appropriate use of present value tables. Given below are the present value factors for $1.00 discounted at 10% for one to five periods. Each of the items 69 to 72 is based on 10% interest compounded annually.

-If an individual deposits $8,000 in a savings account today, what amount of cash would be available two years from today?
A) $8,000 × 0.826
B) $8,000 × 0.826 × 2
C) $8,000 ÷ 0.826
D) $8,000 ÷ 0.909 × 2

Question

Items 69 through 72 apply to the appropriate use of present value tables. Given below are the present value factors for $1.00 discounted at 10% for one to five periods. Each of the items 69 to 72 is based on 10% interest compounded annually.
 
-If an individual deposits $8,000 in a savings account today, what amount of cash would be available two years from today?
A) $8,000 × 0.826 
B) $8,000 × 0.826 × 2 
C) $8,000 ÷ 0.826 
D) $8,000 ÷ 0.909 × 2

Quizplus · Accepted Answer

To find the future value of a deposit, you need to divide the present value by the present value factor (0.826) to account for the interest over two years.

Items 69 Through 72 Apply to the Appropriate Use of Present