(Present value)Ronen Consulting has just realized an accounting error that has resulted in an unfunded liability of $395,000 due in 30 years. In otherwords, they will need $395,000 in 30 years. ToniFlanders, thecompany's CEO, is scrambling to discount the liability to the present to assist in valuing thefirm's stock. If the appropriate discount rate is 8 percent, what is the present value of theliability?

A-If the appropriate discount rate is 8 percent, the present value of the $395,000 liability due in

30 years is ____

B-What is the present value of the liability?

(Present-value comparison) You are offered $100,000 today or $360,000 in 14 years. Assuming that you can earn 13 percent on yourmoney, which should youchoose?

A-If you are offered $360,000 in 14 years and you can earn 13 percent on yourmoney, what is the present value of $360,000?

B-Which should you choose?