2. P5-12: Present value concept:
Answer each of the following questions.
a. What single investment made today, earning 12% annual interest, will be worth $6,000 at the end of 6 years?
b. What is the present value of $6,000 to be received at the end of 6 years if the discount rate is 12%?
c. What is the most you would pay today for a promise to repay you $6,000 at the end of 6 years if your opportunity cost is 12%?
d. Compare, contrast, and discuss your findings in parts a through c.
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