Following is a table for the present value of $1 at compound interest: ...
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Accounting
Following is a table for the present value of $1 at compound interest:
Year
6%
10%
12%
1
0.943
0.909
0.893
2
0.890
0.826
0.797
3
0.840
0.751
0.712
4
0.792
0.683
0.636
5
0.747
0.621
0.567
Following is a table for the present value of an annuity of $1 at compound interest:
Year
6%
10%
12%
1
0.943
0.909
0.893
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 provided, if an investment is made now for $19,500 that will generate a cash inflow of $6,500 a year for the next 4 years, the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%, is
a.$19,500
b.$6,500
c.$1,105
d.$20,605
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