Valentino will receive $25,000 in 3 years.His opportunity cost is 8% compounded continuously.The present value of this cash flow is closest to

Question

Quizplus · Accepted Answer

The present value of a future cash flow compounded continuously is calculated using the formula PV = FV * e^(-rt). Here, FV = $25,000, r = 0.08, and t = 3. Plugging these values into the formula gives PV ≈ $19,665.70.

Valentino Will Receive $25,000 in 3 Years