Present Value of an Annuity Determine the present value of $120,000 to be received at the...
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Present Value of an Annuity Determine the present value of $120,000 to be received at the end of each of four years, using an interest rate of 6%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year X Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. c. Why is the present value of the four $120,000 cash receipts less than the $480,000 to be received in the future? The present value is less due to the compounding of interest ✓over the 4 years. Present Value of an Annuity Determine the present value of $120,000 to be received at the end of each of four years, using an interest rate of 6%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year X Second Year Third Year Fourth Year Total present value b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. c. Why is the present value of the four $120,000 cash receipts less than the $480,000 to be received in the future? The present value is less due to the compounding of interest ✓over the 4 years.
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a Using the present value of 1 table in Exhibit 5 we can calculate the present value of each individ... View the full answer
Related Book For
Financial and Managerial Accounting
ISBN: 978-0538480895
11th Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Posted Date:
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