The Present Value of £5609 Receivable at the End of Year

question 17

Multiple Choice

The present value of £5609 receivable at the end of year 5 assuming a 10% discount rate is equal to (to the nearest £) :

• A) £3102
• B) £5643
• C) £3483
• D) £3678

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Definitions:

Depreciation

The reduction in the value of an asset over time, particularly for tax purposes.

Equipment

Tangible property used in operations, such as machinery or computer hardware, which can often be depreciated for tax purposes.

Capital Asset

A long-term asset such as equipment, real estate, or securities, which is not easily sold in the regular course of a business's operations for cash.

Taxpayer's Home

The primary place of abode of a taxpayer that determines tax liabilities and benefits.