If Lucy earns a 6% after-tax rate of return, $8,000 received in four years is worth how much today?
A) $8,000
B) $7,544
C) $8,989
D) $6,336
E) None of these

Question

Quizplus · Accepted Answer

To find the present value of $8,000 received in four years at a 6% rate of return, use 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