If Joel earns a 10 percent after-tax rate of return, $10,000 received in two years is worth how much today? Use Exhibit 3.1. (Round discount factor(s)to three decimal places.)
A)$10,000
B)$9,090
C)$8,260
D)$11,000
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

To find the present value of $10,000 received in two years with a 10% discount rate, use the formula: PV = FV / (1 + r)^n. Here, FV = $10,000, r = 0.10, and n = 2. PV = $10,000 / (1.10)^2 = $8,264.46, rounded to $8,260.

If Joel Earns a 10 Percent After-Tax Rate of Return