Below is a table for the present value of $1 at Compound interest. Year 6% 10% 1

Question

Below is a table for the present value of $1 at Compound interest.

Year
6%
10%
12%
1
.943
.909
.893
2
.890
.826
.797
3
.840
.751
.712
4
.792
.683
.636
5
.747
.621
.567

Below is a table for the present value of an annuity of $1 at compound interest.

Year
6%
10%
12%
1
.943
.909
.893
2
1.833
1.736
1.690
3
2.673
2.487
2.402
4
3.465
3.170
3.037
5
4.212
3.791
3.605


Using the tables above, what is the present value of $4,000 (rounded to the nearest dollar) to be received at the end of each of the next 3 years, assuming an earnings rate of 12%?

Explanation / Answer

Answer is (d.) $19,020 Future value of $6,000 (rounded to the nearest dollar) to be received at the end of each of the next 4 years, assuming an earnings rate of 10% is as below 6000( 3.170) = $19,020 Caution: The question asked is wrong.It should ask about the future value and not present value to match the options given below.

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