What Is the Approximate Present Value of $8,000 Received Four

question 113

Multiple Choice

What is the approximate present value of $8,000 received four years from today if the interest rate is 12 percent?

• A)$12,588
• B)$4,882
• C)$10,837
• D)$5,084
• E)$6,908

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of an asset evenly over its useful life, used for calculating depreciation expenses on the income statement.

Capital Budgeting

The process of planning and evaluating investments in long-term assets to determine which projects will generate the most profitable returns.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, making the expense predictable and consistent.

Income Taxes

Taxes levied by governments on individuals' or businesses' net income, where the amount owed varies based on the level of the income earned.