Discounted at 10%, $1000 received at the end of each year for three years is worth less than $2,700 received today.
PV_A = A $\times$ PV_IFA (App. D: 3 periods, 10%)
= $1,000 $\times$ .2.487 = $2,487

Question

Discounted at 10%, $1000 received at the end of each year for three years is worth less than $2,700 received today. PV_A = A $\times$ PV_IFA (App. D: 3 periods, 10%) = $1,000 $\times$ .2.487 = $2,487

Quizplus · Accepted Answer

The calculation shows that the present value of the three-year cash flow is $2,487, which is less than the $2,700 received today. Therefore, the statement is true.

Discounted at 10%, $1000 Received at the End of Each ×\times×

Discounted at 10%, $1000 Received at the End of Each $\times$