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Eh Kaw owns The Donut Hole, currently valued at $115,000. Eh Kaw predicts 12% growth over the next 2 years....

17. Eh Kaw owns The Donut Hole, currently valued at $115,000. Eh Kaw predicts 12% growth over the next 2 years. Determine the present value at a rate of 8% compounded annually. The present value factor is 0.85734.
$123,676.44
$138,517.61
$98,594.10
$144,256.00

Answer

The future value of The Donut Hole after 2 years with 12% growth is calculated as follows:

Future Value = $115,000 * (1 + 0.12)^2 = $115,000 * 1.2544 = $144,256.00

Using the present value factor of 0.85734, the present value is:

Present Value = Future Value * Present Value Factor = $144,256.00 * 0.85734 = $123,676.44

Answer: $123,676.44

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