FSOT: 500 Test Prep Study Questions

Category - Mathematics & Statistics

Discounting future cash flow to the present period is common in capital budgeting. If positive cash flow at the end of year 2 is $132,000, the interest rate for year 1 is 10 percent, and the interest rate for year 2 is 20 percent, the present value of the $132,000 at the beginning of year 1 is
  1. $100,000
  2. $110,000
  3. $120,000
  4. $132,000
Explanation
Answer: A - $100,000
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