The rate of earnings is 10% and the cash to be received in two years is $10,000.Determine the present value amount,using the following partial table of present value of $1 at compound interest.

Question

Quizplus · Accepted Answer

Using the information given, we know that the rate of earnings is 10% and the cash to be received in two years is $10,000. To find the present value, we need to use the table of present value of $1 at compound interest.

Looking at the table, we can see that the present value factor for 10% and two years is 0.826.

Present value = Cash to be received in the future / Present value factor 
Present value = $10,000 / 0.826 
Present value = $12,106.87

Therefore, the present value amount is $8,260 (rounded to the nearest dollar). The best choice based on the given options is B.

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