Question: Present value calculations-effects of compounding frequency, discount rates, and time periods Using a present value table, your calculator, or a computer program present value function,

Present value calculations-effects of compounding frequency, discount rates, and time periods

Present value calculations-effects of compounding frequency, discount rates, and time periods Using a present value table, your calculator, or a computer program present value function, verify that the present value of $100,000 to be received in five years at an interest rate of 16%, compounded annually, is $47,610. Calculate the present value of $100,000 for each of the following items (af) using these facts, except a. Interest is compounded semiannually. b. Interest is compounded quarterly. c. A discount rate of 12% is used. d. A discount rate of 20% is used. e. The cash will be received in three years. f. The cash will be received in seven years

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Exercise 6-18 (Static) Present value calculations-effects of compounding frequency, discount rates, and time periods Appendix LO 610 The present value of $100,000 to be received in five years at an...

The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Enter...

E7-7 (book/static) Question Help E Requirement Calculate the present value of each of the following cash flows at 8% using interes tables, a financial calculator, or a spreadsheet i (Click the icon...

Time value of money a . Finding FV Investment ( PV ) $ 1 , 0 0 0 Interest rate ( I ) 1 2 % Number of years ( N ) 4 Formula Future value ( FV ) #N / A b . Creating a table with FVs at various interest...

Time value of money a . Finding FV Investment ( PV ) $ 1 , 0 0 0 Interest rate ( I ) 8 % Number of years ( N ) 6 Formula Future value ( FV ) #N / A b . Creating a table with FVs at various interest...

a . Finding FV Investment ( PV ) $ 1 , 0 0 0 Interest rate ( I ) 8 % Number of years ( N ) 5 Formula Future value ( FV ) #N / A b . Creating a table with FVs at various interest rates and time...

The first table gives the present value of $1 at the end of different time periods, given different interest rates. For example, at an interest rate of 10%, the present value of $1 to be paid in 20...

Time value of many Finding P 4ement PV) $1,000 terest rate Number of ye Fulus (FV) www B Creating a table with FV at various interest rates and time periods using Table Year 4) Interest Rate E 10 11...

Which of the following statements is correct? Statement 1. Of all the techniques used in finance, the least important is the concept of the time value of money. Statement 2. Compounding is the...

Consider a Ricardian model with money. The output per man hour of good X and good Y are respectively 5 units and 4 units in the USA, and 1 unit and 2 units in China. Both economies are perfectly...

The Financial Accounting Standards Board requires companies to supplement their consolidated financial statements with disclosures about segments of their businesses. To comply with this standard,...

What is the purpose of a crisis waiver in an annuity? a . It waives the insurer's surrender charge for any withdrawal due to a defined circumstance or situation. b . It waives the early distribution...

Long - term competitive advantage rests on the ability to reap the benefits of existing business models while investing in innovation to prepare for future growth. In this respect, do you think IOI...

6. Describe why communication is vital to everyone

2. Think of someone (a family member, a celebrity, a politician, a friend, a professor) who exhibits competent communication in a particular context. What behaviors does this person exhibit that make...

3. Keep a log of all the different channels (face to face, written, computer mediated, telephonic, others) you use to communicate during the course of one morning or afternoon. Do you regularly...