{"id":216847,"date":"2025-05-20T13:53:30","date_gmt":"2025-05-20T13:53:30","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=216847"},"modified":"2025-05-20T13:53:32","modified_gmt":"2025-05-20T13:53:32","slug":"flaherty-is-considering-an-investment-that-if-paid-for-immediately-is-expected-to-return-163000-ten-years-from-now","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/20\/flaherty-is-considering-an-investment-that-if-paid-for-immediately-is-expected-to-return-163000-ten-years-from-now\/","title":{"rendered":"Flaherty is considering an investment that, if paid for immediately, is expected to return $163,000 ten years from now."},"content":{"rendered":"\n<p>Flaherty is considering an investment that, if paid for immediately, is expected to return $163,000 ten years from now. If Flaherty demands a 12% return, how much is she willing to pay for this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your &#8220;PV of a single amount&#8221; to 4 decimal places and final answer to the nearest whole dollar.)<\/p>\n\n\n\n<p>Future Value \u00d7 p (PV of a Single Amount) = Present Value \u00d7 =<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-1-color\">The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n<p>To calculate how much Flaherty is willing to pay for an investment that will return $163,000 in 10 years with a 12% expected rate of return, we use the formula for the <strong>present value (PV) of a single amount<\/strong>: PV=FV\u00d7PV&nbsp;factor\\text{PV} = \\text{FV} \\times \\text{PV factor}<\/p>\n\n\n\n<p>Where:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>FV<\/strong> is the future value = $163,000<\/li>\n\n\n\n<li><strong>PV factor<\/strong> is the present value factor of a single amount for 12% interest over 10 years<\/li>\n\n\n\n<li><strong>PV<\/strong> is the present value or how much Flaherty should be willing to pay today<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Step 1: Locate the PV Factor<\/h3>\n\n\n\n<p>We need to use the <strong>Present Value of $1 table<\/strong> for 12% interest over 10 years.<\/p>\n\n\n\n<p>From the table:<br><strong>PV factor (12%, 10 years)<\/strong> = <strong>0.3220<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Step 2: Calculate Present Value<\/h3>\n\n\n\n<p>PV=163,000\u00d70.3220=52,486\\text{PV} = 163,000 \\times 0.3220 = 52,486<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\u2705 Final Answer:<\/h3>\n\n\n\n<p><strong>Flaherty should be willing to pay: $52,486<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">\ud83d\udcd8 300-Word Explanation:<\/h3>\n\n\n\n<p>The concept of present value (PV) is fundamental in finance, as it helps assess the worth of future cash flows in today&#8217;s dollars. Money has a time value, meaning a dollar today is worth more than a dollar in the future due to its potential earning capacity. This principle is the basis for the present value calculation.<\/p>\n\n\n\n<p>In this case, Flaherty is considering an investment that will pay $163,000 ten years from now. However, she expects a 12% annual return on her investment. To determine how much she should pay <strong>today<\/strong> for that future payoff, we discount the future value ($163,000) back to the present using the <strong>present value of a single amount<\/strong> formula.<\/p>\n\n\n\n<p>We reference a <strong>present value of $1 table<\/strong>, which shows the present value of $1 to be received in the future, discounted at various interest rates and time periods. At 12% for 10 years, the PV factor is <strong>0.3220<\/strong>, meaning $1 received in 10 years is worth only 32.20 cents today.<\/p>\n\n\n\n<p>We multiply this factor by the future value: $163,000\u00d70.3220=$52,486\\$163,000 \\times 0.3220 = \\$52,486<\/p>\n\n\n\n<p>This result represents the amount that, if invested today at 12% interest, would grow to $163,000 in 10 years.<\/p>\n\n\n\n<p>Thus, if Flaherty pays <strong>more than $52,486<\/strong>, her return would be <strong>less than 12%<\/strong>. If she pays <strong>exactly $52,486<\/strong>, she earns <strong>exactly 12%<\/strong>. This calculation ensures she meets her investment return expectations.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Flaherty is considering an investment that, if paid for immediately, is expected to return $163,000 ten years from now. If Flaherty demands a 12% return, how much is she willing to pay for this investment? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-216847","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/216847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=216847"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/216847\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=216847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=216847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=216847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}