Given an 8 Percent Interest Rate, Compute the Present Value

question 157

Multiple Choice

Given an 8 percent interest rate, compute the present value of payments made in years 1, 2, 3, and 4 of $900, $800, $700, and $600.

• A) $2,409.33
• B) $2,515.90
• C) $2,591.72
• D) $2,611.38

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Definitions:

Round

In mathematics or financial contexts, to round means adjusting a number to a specified degree of precision, often to the nearest whole number or decimal place.

Current Ratio

Current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.

Payables

Financial obligations or amounts owed by a business to its creditors or suppliers for goods and services received.

Equity

The total value of a company's ownership interest by its shareholders, calculated as assets minus liabilities.