What is the present value of receiving $38,000 in nine years, discounted at 6%?

To calculate the present value of receiving a future amount, you use the formula for present value, which is:

[ PV = \frac{FV}{(1 + r)^n} ]

where:

• ( PV ) is the present value,

• ( FV ) is the future value (in this case, $38,000),

• ( r ) is the discount rate (6% or 0.06), and

• ( n ) is the number of years until the payment is received (9 years).

Using the provided values in the formula:

1. First, calculate the discount factor:

[

(1 + r)^n = (1 + 0.06)^9 \approx 1.59385

]

2. Then, calculate the present value:

[

PV = \frac{38,000}{1.59385} \approx 23,786.72

]

This is slightly different from the value given in choice C, which indicates a need to review the computation. However, it's important to note that the calculations can vary slightly based on the rounding at each step.

When the calculation is performed correctly, you appropriately recognize that the