If Lucy earns a 6 aftertax rate of return 8000 received in f

If Lucy earns a 6% after-tax rate of return, $8,000 received in four years is worth how much today? Use Exhibit 31. (Round present and future value amounts to 3 places) Multiple Choice $8,000 $7,544 $8,989 $6,336 None of the choices are correct

Solution

The correct answer is $ 6,336

Note :

Present Value = Amount received * Present Value of Discounting Factor ( 6% , 4)

= $ 8,000 * 0.792

= $ 6,336