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What is the present value of this one time payment

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Q1. John Deere sells a tractor for $200,000 which is due in 4 years. What is the present value of this one time payment if the annual interest rate is 8%?

A. $147,006

B. $272,098

C. $200,000

D. $50,000

Q2. Professor Wolfe would like to go on a European vacation in 5 years and estimates she'll need $20,000. What amount should she invest today in order to have $20,000 in 5 years assuming she will earn 4% in interest annually.

A. $4,000

B. $16,439

C. Can't Professor Wolfe figure this out for herself?

D. $20,000

Q3. Prof Wolfe would like to retire today. She would like to receive $50,000 per year for the next 10 years before she starts receiving her social security. How much does she have to invest today assuming she will earn 6% interest annually

A. $368,000

B. $500,000

C. $217,750

Reference no: EM131738581

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