What Is the Present Value of a Payment of $21,000

question 46

Multiple Choice

What is the present value of a payment of $21,000 three years from now if the effective annual interest rate is 4%?

• A) $17,951
• B) $18,480
• C) $18,658
• D) $18,669
• E) $19,218

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Definitions:

Interest Revenue

Income earned on investments, loans, or accounts receivable that is generated from the interest charged.

Annual Return

The percentage of increase or decrease in the value of an investment over a one-year period, including dividends and appreciation.

Direct Financing Lease

A type of lease where the lessor records receivables equal to the net investment in the lease and recognizes income from interest over the lease term.