One year from today, Pamela Oliver is scheduled to receive a $32,000 payment from a trust fund
Question:
One year from today, Pamela Oliver is scheduled to receive a $32,000 payment from a trust fund her father established. She wants to buy a car today but does not have the money. A friend has agreed to give Pamela the present value of the $32,000 today if she agrees to give him the full $32,000 when she collects it one year from now. They agree that 8 percent reflects a fair discount rate.
Required
Round your computations to the nearest whole dollar.
a. You have been asked to determine the present value of the future cash flow. Use a present value table to determine the amount of cash that Pamela's friend should give her.
b. Use an algebraic formula to verify the result you determined in Requirement a.
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a Present Value Present Value Future Value x Table Factor 1 Present Value Present value 32000 x 0925926 29630 1 Table 1 n 1 r 8 b Investment 008 x Inv...View the full answer
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Related Book For 
Fundamental Managerial Accounting Concepts
ISBN: 978-1259569197
8th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds
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