Answered: How much must you invest today at 10%…

How much must you invest today at 10% interest in order to see your investment grow to $15,000 in 3 years? O a) $9,150 Ob) $10,665 Oc) $21,315 Od) $11,265

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14EB: How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one...

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

How much must you invest today at 10% interest in order to see your investment
grow to $15,000 in 3 years?
a) $9,150
b) $10,665
Oc) $21,315
d) $11,265

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