Question

The present value of an obligation of $8,000 payable in 7 years at 8% is: (see present value tables from chapter)

A. $7,360
B. $6,412
C. $3,520
D. $4,668

Answer 1

The present value of an obligation of $8,000 payable in 7 years at 8% is $4,668.

Step-by-step explanation:

The present value of an obligation of $8,000 payable in 7 years at 8% can be calculated using the present value formula. The formula is:

Present Value = Future Value / (1 + interest rate)number of years

Plugging in the values, we get:

Present Value = $8,000 / (1 + 0.08)7 = $4,668

Therefore, the correct answer is D. $4,668.