How 0.0851 get in the solution given for r? 1. The Lexington Property Development Company has a RM10,000 note receivablefrom a customer due in three years. How much is the note worth today if the interest rateisc. 8% compounded quarterly? c. R=8%Present value = Future value/ (1+r)^n= 10,000 / (1+0.0851)^3= 7884.93

Present value is the current worth of any future cashflow discounted at a required rate.

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How 0.0851 get in the solution given for r?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 31P

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

How 0.0851 get in the solution given for r?

1. The Lexington Property Development Company has a RM10,000 note receivable
from a customer due in three years. How much is the note worth today if the interest rate
is
c. 8% compounded quarterly?

c. R=8%
Present value = Future value/ (1+r)^n
= 10,000 / (1+0.0851)^3
= 7884.93

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