The following information pertains to an investment: Ignoring income taxes, the present value of the salvage value (rounded) is

Question

The following information pertains to an investment:  Ignoring income taxes, the present value of the salvage value (rounded) is

Quizplus · Accepted Answer

The present value of the salvage value can be calculated using the formula:
Present value = Salvage value/[(1+i)^n]
Here, salvage value = $60,000, i (discount rate) = 8%, and n = 5 years
Present value = 60,000/[(1+0.08)^5] = $34,613.85
Rounding it to the nearest dollar, the present value of the salvage value is $34,614. Hence, the answer is option C.

The Following Information Pertains to an Investment: Ignoring Income