Discounting Future Cash Flow to the Present Period Is Common

Multiple Choice

Discounting future cash flow to the present period is common in capital budgeting. If positive cash flow at the end of year 2 is $132,000, the interest rate for year 1 is 10 percent, and the interest rate for year 2 is 20 percent, the present value of the $132,000 at the beginning of year 1 is

A) $100,000
B) $110,000
C) $120,000
D) $132,000