D is corrent. The requirement is to determine the amount of cash that will be accumulated by Lean in two years. Normally, FV factors would be used to work this problem. Because PV factors are the only information given, the formula, PV amount equals the PV factor times the future amount, must be used. Let x = the future value. Substituting into this formula, 10,000 = .826(x). Solving for x, the future value is $12,107.
A is incorrect. FV factors would be used to work this problem. Because PV factors are the only information given, the formula, PV amount equals the PV factor times the future amount, must be used. Let x = the future value. Substituting into this formula, 10,000 = .826(x). Solving for x, the future value is $12,107.
B is incorrect. FV factors would be used to work this problem. Because PV factors are the only information given, the formula, PV amount equals the PV factor times the future amount, must be used. Let x = the future value. Substituting into this formula, 10,000 = .826(x). Solving for x, the future value is $12,107.
C is incorrect. FV factors would be used to work this problem. Because PV factors are the only information given, the formula, PV amount equals the PV factor times the future amount, must be used. Let x = the future value. Substituting into this formula, 10,000 = .826(x). Solving for x, the future value is $12,107.
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