If Joel earns a 10% after-tax rate of return,$10,000 received in two years is worth how much today? Use Exhibit 3.1 in the text.(Round present and future value amounts to 3 places)
A) $10,000.
B) $9,090.
C) $8,260.
D) $11,000.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

The present value (PV) of $10,000 received in two years at a 10% rate of return is calculated using the formula: PV = FV / (1 + r)^n, where FV is the future value, r is the rate of return, and n is the number of years. Thus, PV = $10,000 / (1 + 0.10)^2 = $8,264.46, which rounds to $8,260.

If Joel Earns a 10% After-Tax Rate of Return,$10,000 Received