What Is the Present Value of $36,800 to Be Received

question 85

Multiple Choice

What is the present value of $36,800 to be received 6 years from today if the discount rate is 12%?

• A) $18,644.03
• B) $19,407.18
• C) $19,414.14
• D) $20,211.08
• E) $20,390.14

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Definitions:

Depreciation

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life, reflecting the reduction in value over time.

Useful Life

The estimated period over which an asset is expected to be usable by the entity owning it, affecting depreciation calculations.

Adjusting Entries

At the end of an accounting interval, journal entries are made for the allocation of profits and expenses to the time frame in which they were genuinely incurred.

Prepaid Expenses

Payments made in advance for goods or services that will be used in the future, recorded as assets on the balance sheet until they are consumed.