Question What. is the maximum amount you would pay for an asset that generates an income of $150,000 at the end of each ve years if the opportunity cost of using funds is 9 peroent? In this case we have to calculate the present value of $150000 thatwe have received at the end of fth year. Present value = future value * P'v'F[r,n years] Present value Future value = $150,000 r = 0 %{ opportunity cost} n: 5 years P'v'F [9%, 5 years} = 0.550 P'v'F{r, n years] are taken from the present vale of future amount table. Present value = $150,000*0_550 = $9T500 So. $97500 is the maximum amount that we would pay for an asset that generates an income of $150,000 at the end of each ve years if the opportunity cost of using funds is 9 percent