If the rate of earnings is 12% and the cash to be received in two years is $20,000, determine the present value amount, using the following partial table of present value of $1 at compound interest. ? $$\begin{array} { c c c c }
\text { Year } & 6 \% & 10 \% & 12 \% \
\hline 1 & 0.943 & 0.909 & 0.893 \
2 & 0.890 & 0.826 & 0.797 \
3 & 0.840 & 0.751 & 0.712 \
4 & 0.792 & 0.683 & 0.636
\end{array}$$

Question

If the rate of earnings is 12% and the cash to be received in two years is $20,000, determine the present value amount, using the following partial table of present value of $1 at compound interest. ? $$\begin{array} { c c c c } 
\text { Year } & 6 \% & 10 \% & 12 \% \
\hline 1 & 0.943 & 0.909 & 0.893 \
2 & 0.890 & 0.826 & 0.797 \
3 & 0.840 & 0.751 & 0.712 \
4 & 0.792 & 0.683 & 0.636
\end{array}$$

Quizplus · Accepted Answer

The present value of $20,000 received in two years at a 12% rate is calculated using the present value factor for 2 years at 12%, which is 0.797. Thus, $20,000 * 0.797 = $15,940.

If the Rate of Earnings Is 12% and the Cash