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vodka [1.7K]
3 years ago
9

What is the present value of receiving $100 investment two years from now at a 10 percent annual discount rate

Business
1 answer:
guapka [62]3 years ago
8 0

Answer: $121

Explanation:

The question simply wants us to find the present value of receiving $100 investment two years from now at a 10 percent annual discount rate.

This can be easily solved as follows:

For the first year, the $100 will be worth:

= $100 + ($100 × 10%)

= $100 + ($100 × 0.1)

= $100 + $10

= $110

The worth at the end of the second year will then be:

= $110 + ($110 × 10%)

= $110 + $11

= $121

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Explanation:

The Journal Entry is shown below:-

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2 years ago
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Measured over equal time periods.

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