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Math Asked by a SnapAndSolve user · about 20 hours ago

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

2. 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.
$98,594.10
$144,256.00
$123,676.44
$138,517.61

Answer

To find the present value, we need to calculate the future value first and then apply the present value factor.

  1. Future Value (FV) after 2 years with 12% growth: FV = $115,000 * (1 + 0.12)^2 = $115,000 * 1.2544 = $144,256.00
  2. Present Value (PV) using the present value factor: PV = FV * Present Value Factor = $144,256.00 * 0.85734 = $123,676.44

The correct answer is $123,676.44.

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