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What is the present value of $4000 received at the end of the year for the next three years, with a discount rate of 8%?

PVIFA8%,3=2.5771


a. $12,000
b. $15,742.35
c. $10,308.40
d. $9500

1 Answer

5 votes

Final answer:

The present value of $4000 received at the end of the year for the next three years, with a discount rate of 8%, is c. $10,308.40.

Step-by-step explanation:

The present value of $4000 received at the end of the year for the next three years, with a discount rate of 8%, can be calculated using the present value formula. The formula is PV = Payment / (1 + r)^n, where PV is the present value, Payment is the future payment, r is the discount rate, and n is the number of periods. In this case, the future payment is $4000, the discount rate is 8%, and the number of periods is 3 years.

Using the formula, the present value is calculated as $4000 / (1 + 0.08)^3 = $10,308.40. Therefore, the correct answer is c. $10,308.40.

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