Using a discount rate of 14 percent, the present value of a $10,000 benefit received 5 years from now is $5,500.49.

Question

Quizplus · Accepted Answer

The present value of a $10,000 benefit received 5 years from now, given a discount rate of 14 percent, can be calculated using the formula:

PV = FV / (1 + r)^n

Where PV is the present value, FV is the future value, r is the discount rate, and n is the number of years.

Substituting the given values, we get:

PV = 10,000 / (1 + 0.14)^5 = 4,393.23

This means that the present value of the $10,000 benefit received 5 years from now is $4,393.23, not $5,500.49. Therefore, the given statement is false (option B).

Using a Discount Rate of 14 Percent, the Present Value