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Financial accounting uses several methods of determining a value to record. One of those methods is discounting future cash flows to arrive at a present
Financial accounting uses several methods of determining a value to record. One of those methods is discounting future cash flows to arrive at a present value. Given the situation of an estimated annual discount rate of 8% and annual payments of $3,000 for two years, with payments due at the end of each year, which equation is appropriate? 1) (3000 + 3000) * 1.08^2 = present value 2) (3000 + 3000) / 1.08 = present value 3) (3000+3000) * .92 = present value 4) (3000 / 1.08) + [3000 / (1.08*1.08)] = present value
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