Question

I am working on the scenerio ABC Company of Kuwait. How was the value 15% of scrap sale after 15 years - $200,000 discounted calculated in the amount of $24,578.90?

Answer 1

Present Value = Amount* Present Value of Discounting Factor (15% ,15)

= $ 200,000 * 1/(1.15) ^ 15

= $ 200,000 * 0.122894485

= $ 24,578.89704

= $ 24,578.90

Alternatively the Discounting Factor is computed as under:

Year	Discounting Factor ( 15%)
1	0.869565217
2	0.756143667
3	0.657516232
4	0.571753246
5	0.497176735
6	0.432327596
7	0.37593704
8	0.326901774
9	0.284262412
10	0.247184706
11	0.214943223
12	0.18690715
13	0.162527957
14	0.141328658
15	0.122894485

For Year 1 Discounting Factor = 1/(1.15)

For Year 2 Discounting Factor = 1/(1.15*1.15)

For Year 3 Discounting Factor = 1/(1.15*1.15*1.15) and so on.