Question - Below is a table for the present value of $1 at Compound interest.
|
Year
|
6%
|
10%
|
12%
|
|
1
|
0.943
|
0.909
|
0.893
|
|
2
|
0.890
|
0.826
|
0.797
|
|
3
|
0.840
|
0.751
|
0.712
|
|
4
|
0.792
|
0.683
|
0.636
|
|
5
|
0.747
|
0.621
|
0.567
|
Below is a table for the present value of an annuity of $1 at compound interest.
|
Year
|
6%
|
10%
|
12%
|
|
1
|
0.943
|
0.909
|
0.893
|
|
2
|
1.833
|
1.736
|
1.690
|
|
3
|
2.673
|
2.487
|
2.402
|
|
4
|
3.465
|
3.170
|
3.037
|
|
5
|
4.212
|
3.791
|
3.605
|
Using the tables above, if an investment is made now for $21,002.00 that will generate a cash inflow of $2,520.24 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment, (assuming an earnings rate of 12%)?
Select the correct answer.
- $7,654
- $2,520
- $21,002
- $13,348