Manatee Manufacturing sells a piece of equipment to make room for new machinery. Manatee will receive the sales price of $50,000 at the end of 4 years. Assuming interest at a rate of 6% per year, the Present Value of this future cash flow is how much?

Question

Quizplus · Accepted Answer

To find the Present Value of a future cash flow, we use the formula: Present Value = Future Value / (1 + r)^n, where r is the interest rate and n is the number of years. Substituting the given values, we get Present Value = 50,000/(1+0.06)^4 = 39,604.50. Therefore, the best choice is A.

Manatee Manufacturing Sells a Piece of Equipment to Make Room