Answer:
a. $0.92
b. $1,840
Explanation:
a. 2 year discount factor is 0.92
Present value of $1 to be received in 2 years =
$1 * discount factor
Present value = $1 * 0.92
Present value = $0.92
b. Present value of $2000 can also be calculated in the same manner by using the 2 year discount factor.
Present value = $2000 * 0.92
Present value = $1,840
