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A work package, scheduled for one year from today, will cost $114,000 at that time. It can be done now at a reduced cost. Using a 12% discount rate, the maximum cost you should authorize for doing the work now is:
Correct Answer: A
Present value of $114,000 paid after one year is $101,785.70 and I think answer should be B ($101,750). Reference: Project Management: A Systems Approach to Planning, Scheduling and controlling, 6th Edition p. 762