A year from today, Pamela Oliver is scheduled to receive $32,000 payment from a trust fund her father established. She wants to buy a car today but does not have the money. A friend has agreed to give Pamela the present value of the $32,000 today if she agrees to give him the full $32,000 when she collects it one year from now. They agree that 8 percent reflects a fair discount rate.
Round your computations to the nearest whole dollar.
You have been asked to determine the present value of the future cash flow. Use a present value table to determine the amount of cash the Pamela’s friend should give her.
Use an algebraic to verify the results you determined in requirements.