Discussion
The present worth of 10 000 receivable in 5 years at 8 per cent is about
Answer: D
Correct answer: 6806
\[ P = \frac{10{,}000}{1.08^5} = \frac{10{,}000}{1.4693} = 6{,}806. \] Multiplying by 1.4693 instead of dividing gives 14,693, which is offered as a distractor and is the classic error - a present worth must always be smaller than the future sum at a positive rate.
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