The present value of $200,000 development costs in year 0 assuming a 10% discount rate is:
A)$180,000
B)$190,000
C)$200,000
D)$210,000

Question

​The present value of $200,000 development costs in year 0 assuming a 10% discount rate is:
A)$180,000
B)​$190,000
C)​$200,000
D)​$210,000

Quizplus · Accepted Answer

The present value of a cost or investment in year 0 is simply its current value, as no discounting is applied to values in the current year (year 0). Therefore, the present value of $200,000 in year 0 is $200,000, regardless of the discount rate.

​The Present Value of $200,000 Development Costs in Year 0

The Present Value of $200,000 Development Costs in Year 0