What Is the Present Value of $5,000 to Be Received

question 211

Multiple Choice

What is the present value of $5,000 to be received 10 years from now if the interest rate is 10 percent?

• A) $1,927.72
• B) $500
• C) $4,545.45
• D) $12,968.71

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Definitions:

Installment Note Payable

A debt instrument that requires a series of periodic payments to the lender over a specified period of time.

Interest Expense

The expenditure an entity incurs from borrowing funds during a certain period.

Notes Payable

Written agreements in which one party promises to pay another party a definite sum of money either on demand or at a specified future date.

Payment

The act of transferring money or other valuable items in exchange for goods, services, or to fulfill a legal obligation.