eBook Present Value of Amounts Due Assume that you are going to receive $300,000 in 10 years. The current market rate of interest is 4.5%. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dollar. x b. Why is the present value less than the $300,000 to be received in the future? The present value is less due to the compounding of interest over the 10 years. Feedback Check My Work Review the time value of money concept. Recall that the time value of money concept recognizes that cash received today is worth more than the same amount of cash to be received in the future. Exhibit 5 Present Value of $1 at Compound Interest 1 2 3 4 5 6 0.79031 7 8 9 10 Periods 4% 41% 5% 5% 6% 0.96154 0.956940 0.95238 0.94787 0.94340 0.92456 0.915730 0.90703 0.89845 0.89000 0.88900 0.876300 0.86384 0.85161 0.83962 0.85480 0.838560 0.82270 0.80722 0.79209 0.82193 0.802450 0.78353 0.76513 0.74726 0.767900 0.74622 0.72525 0.70496 0.75992 0.734830 0.71068 0.68744 0.66506 0.73069 0.703190 0.67684 0.70259 0.672900 0.64461 0.67556 0.643930 0.61391 0.77732 0.72988 0.76290 0.71299 0.68533 0.66634 0.68301 0.62092 0.56447 612% 7% 10% 11% 12% 0.93897 0.93458 0.90909 0.90090 0.89286 0.88496 0.88166 0.87344 0.82645 0.81162 0.79719 0.78315 0.82785 0.81630 0.75131 0.73119 0.71178 0.69305 0.65873 0.63552 0.61332 0.59345 0.56743 0.54276 0.53464 0.50663 13% 0.48032 0.64351 0.62275 0.65160 0.62741 0.61763 0.59190 0.58543 0.55839 0.60423 0.56735 0.53273 0.58201 0.54393 0.50835 0.51316 0.48166 0.45235 0.46651 0.43393 0.40388 0.42506 0.37616 0.42410 0.38554 0.39092 0.36061 0.33288 0.35218 0.32197 0.29459