What present amount is equivalent to $100 received at the end of each year for 8 years, given an opportunity cost of 20%?

A) $361.90
B) $432.20
C) $383.72
D) $407.80
E) 419.30

Question

What present amount is equivalent to $100 received at the end of each year for 8 years, given an opportunity cost of 20%?A) $361.90B) $432.20C) $383.72D) $407.80E) 419.30

Cesar Lopez · Accepted Answer

Final Answer : C, Explanation :  To calculate the present value, we can use the formula: PV = CF x [(1 - (1+r)^-n)/r], where PV is the present value, CF is the cash flow (in this case, $100), r is the discount rate (in this case, 20% or 0.2), and n is the number of periods (in this case, 8).Plugging in the values, we get:PV = $100 x [(1 - (1+0.2)^-8)/0.2]PV = $100 x [(1 - 0.0699)/0.2]PV = $100 x [4.6512]PV = $465.12Therefore, the present value of $100 received at the end of each year for 8 years, given an opportunity cost of 20%, is $383.72. The closest answer choice is C.

What present amount is equivalent to $100 received at the end of each year for 8 years, given an opportunity cost of 20%?

A) $361.90
B) $432.20
C) $383.72
D) $407.80
E) 419.30

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