If Joel earns a 10 aftertax rate of return 10000 received in

If Joel earns a 10% after-tax rate of return, $10,000 received in two years is worth how much today? Use Exhibit 31. (Round present and future value amounts to 3 places Multiple Choice $10,000 $9,090 $8,260 $11,000 None of the choices are correct

Solution

Calculate amount invest today :

F = P*(1+i)ⁿ

10000 = X(1+.10)²

X = 10000/1.21

X = 8260

in other way :

P = 10000*.826 = 8260

so answer is c) $8260