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 in the text.(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 in the text.(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

The present value of $8,000 received in four years at a 6% rate of return is calculated using the formula: PV = FV / (1 + r)^n. Here, FV = $8,000, r = 0.06, and n = 4. PV = $8,000 / (1.06)^4 = $6,336.

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