Present value : This is the amount of future value reducedor discounted at a rate of interest till particular current date. Formula to compute present value: Present value of an amount = Future value ( 1 + interest rate ) number of periods Or, Present value } = { Future value × Present value factor of $1 at interest rate for time periods } To determine: The amount that Company M should pay for the investment to earn an 8% return.

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Chapter A, Problem A.9BE

To determine

Present value: This is the amount of future value reducedor discounted at a rate of interest till particular current date.

Formula to compute present value:

Present value of an amount = Future value(1 + interest rate)number of periods

Or,

Presentvalue} = {Future value × Present value factor of $1 at interest rate for time periods}

To determine: The amount that Company M should pay for the investment to earn an 8% return.

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