If the opportunity cost rate is 8 percent, compounded annually, what is the present value of $8,200 due to be received in 12 years?
A)$3,068
B)$3,256
C)$3,552
D)$3,688
E)$3,854

Question

Quizplus · Accepted Answer

The present value (PV) can be calculated using the formula: PV = FV / (1 + r)^n, where FV is the future value ($8,200), r is the annual interest rate (8% or 0.08), and n is the number of years (12). Plugging in the values: PV = $8,200 / (1 + 0.08)^12 = $8,200 / (1.08)^12 ≈ $3,256.

If the Opportunity Cost Rate Is 8 Percent, Compounded Annually