Present and future value tables of $1 at 9% are presented below

Accounting Apr 01, 2021

Present and future value tables of $1 at 9% are presented below.

Tap's Inc. sold the rights to use one of its patented processes that will result in cash receipts of $2,500 at the end of each of the next four years and a lump sum receipt of $4,000 at the end of the fifth year. The total present value of these payments if interest is at 9% is:

Question 13 options:

$11,468.

$14,000.

$12,100.

$10,699.

Expert Solution

Computation of Present value
Year	Receipts	PV factor (9%)	Present Value
1	$2,500.00	0.91743	$2,294
2	$2,500.00	0.84168	$2,104
3	$2,500.00	0.77218	$1,930
4	$2,500.00	0.70843	$1,771
5	$4,000.00	0.64993	$2,600

Total			$10,699

So, the correct option is D "$10,699".

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