Refer to the pr the previous page. What is the present value today of $4,000 to be received 6 years from today? a. $4,000 × 0.926 X 6 b. $4,000 × 0.794 X 2 c. $4,000 X 0.681 X 0.926 d. cannot be determined from the informa- tion given
Refer to the pr the previous page. What is the present value today of $4,000 to be received 6 years from today? a. $4,000 × 0.926 X 6 b. $4,000 × 0.794 X 2 c. $4,000 X 0.681 X 0.926 d. cannot be determined from the informa- tion given
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Refer to the pr
the previous page. What is the present value today
of $4,000 to be received 6 years from today?
a. $4,000 × 0.926 X 6
b. $4,000 × 0.794 X 2
c. $4,000 X 0.681 X 0.926
d. cannot be determined from the informa-
tion given](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff7dfe7da-0bfa-4920-a4f8-b4887e008d22%2Ffe5a8d0e-52af-422e-8a4c-c7199f57a6cd%2Fduc09ys.jpeg&w=3840&q=75)
Transcribed Image Text:Refer to the pr
the previous page. What is the present value today
of $4,000 to be received 6 years from today?
a. $4,000 × 0.926 X 6
b. $4,000 × 0.794 X 2
c. $4,000 X 0.681 X 0.926
d. cannot be determined from the informa-
tion given
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
Step 1
The present value of future cash inflow means the amount that should be invested today at a certain rate of interest, for a certain time period so as to get a particular amount after that time period.
Pre-requisites to calculate present value are as follows :
A) Future value of money.
B) Interest rate or discounting rate.
C) the number of compounding periods of interest per year.
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