The Present Value of $40,000 to Be Received in Two

question 71

Multiple Choice

The present value of $40,000 to be received in two years, at 12% compounded annually, is (rounded to nearest dollar)

• A) $31,888
• B) $48,112
• C) $8,112
• D) $40,000

---

Definitions:

Functional Currency

The currency of the primary economic environment in which an entity operates, usually determined by the currency in which it predominantly generates and expends cash.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

U.S. Dollars

The official currency of the United States, widely used as a standard or reference currency in international transactions.

Functional Currency

The primary currency of the primary economic environment in which an entity operates, typically used in its financial reporting.