The rate of return is 10% and the cash to be received in one year is $25,000.Determine the present value amount,using the following partial table of present value of $1 at compound interest:

Question

Quizplus · Accepted Answer

We can use the formula for present value: Present Value = Cash to be received / (1 + r)^n, where r is the rate of return and n is the number of time periods. In this case, r = 10% and n = 1.
Using the table, we can find that the present value factor for 10% and 1 year is 0.909. Therefore,
Present Value = $25,000 / (1 + 0.10)^1
Present Value = $22,725
Thus, the best choice is D, as it is the only option that matches the calculated present value.

The Rate of Return Is 10% and the Cash to Be