In: Accounting
Present value = Future value x Present value factor
Year |
Amount received |
PVF $1 at 6% |
Present Value |
[A] |
[B = 1/(1.06)YEAR] |
[C = A x B] |
|
1 |
$ 2,000 |
0.943 [1/(1.06)1] |
$ 1,886 |
2 |
$ 2,000 |
0.890 [1/(1.06)2] |
$ 1,780 |
Total Present Value [1887 + 1780] |
$ 3,666 |