The rate of earnings is 12% and the cash to be received in two years is $10,000. 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

The rate of earnings is 12% and the cash to be received in two years is $10,000. 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 is calculated by multiplying the future cash amount by the present value factor for the given rate and time period. For a 12% rate and 2 years, the factor is 0.797. Thus, the present value is $10,000 * 0.797 = $7,970.

The Rate of Earnings Is 12% and the Cash to Be