Investment End of Year A   B   C   1 ​$ 13,000     ​$ 18,000 2    13,000         3    13,000         4    13,000         5    13,000 ​$ 13,000      6        13,000   54,000 7       13,000     8       13,000     9       13,000     10       13,000   18,000 ​   Assuming an annual discount rate of 23 ​percent, find the present value of each investment. a.  What is the present value of investment A at an annual discount rate of 23 ​percent? b.  What is the present value of investment B at an annual discount rate of 23 ​percent? c.  What is the present value of investment C at an annual discount rate of 23 ​percent?

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.