On 1 July 2019 Mary acquired a little boat for $12524. It was for her personal use. Mary borrowed $12,000 of the money from XYZ Bank. The loan was a fixed interest loan on which Mary paid interest of $2,000. Mary sold the boat in September 2019 for $16157. Required: Calculate Mary's Net Capital Gain or Loss for the 2020 ta: year. Answer:

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.