If Lucy earns a 6% after-tax rate of return, $8,000 received in four years is worth how much today? Use Exhibit 3.1. (Round present and future value amounts to 3 places)
A) $8,000.
B) $7,544.
C) $8,989.
D) $6,336.
E) None of the choices are correct.

Question

If Lucy earns a 6% after-tax rate of return, $8,000 received in four years is worth how much today? Use Exhibit 3.1. (Round present and future value amounts to 3 places) 
A) $8,000.
B) $7,544.
C) $8,989.
D) $6,336.
E) None of the choices are correct.

Quizplus · Accepted Answer

$8,000 × 0.792 (Discount Factor, 4 years, 6%) = $6,336.

If Lucy Earns a 6% After-Tax Rate of Return, $8,000