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.

-What is the present value today of $9,000 to be received six years from today?
A) $9,000 × 0.909 × 6
B) $9,000 × 0.751 × 2
C) $9,000 × 0.621 × 0.909
D) $9,000 × 0.683 × 3

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.
 
-What is the present value today of $9,000 to be received six years from today?
A) $9,000 × 0.909 × 6 
B) $9,000 × 0.751 × 2 
C) $9,000 × 0.621 × 0.909 
D) $9,000 × 0.683 × 3

Quizplus · Accepted Answer

To find the present value today of $9,000 to be received six years from today, we need to use the present value factor for 6 periods at 10% interest rate. From the table, the factor for 6 periods is 0.621. Therefore, the present value today is $9,000 × 0.621 = $5,589.

Items 69 Through 72 Apply to the Appropriate Use of Present