The rate of earnings is 10% and the cash to be received in three 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 partial table of present value of $1 at compound interest, we can find the present value factor for 3 years at 10% as 0.7513. 
PV = Future value / (1 + rate of earnings)^n 
PV = 10,000 / (1 + 0.10)^3 
PV = 10,000 / 1.331 
PV = $7,508.61 (rounded to the nearest cent) 
Therefore, the best choice is C.

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