The present value is the value now of a given amount to be paid or received...
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The present value is the value now of a given amount to be paid or received in the future, assuming compound interest. Present value computations are used in measuring many items, such as, the market price of a bond, notes payable and lease liabilities, and capital budgeting and other investment proposals. There are times when depending on the item being measured, a company may have to calculate the present value of an annuity or the present value an unequal series of payments. Imagine that you are the accounting manager at Sandy's Logistics Company, explain to the assistant accountant, the difference between the present value of an annuity and the present value an unequal series of payments. Include in your explanation, how the present value of an annuity and the present value an unequal series of payments are calculated and give examples to show calculations. (You can use fictitious amounts and percentages in your examples.) The present value is the value now of a given amount to be paid or received in the future, assuming compound interest. Present value computations are used in measuring many items, such as, the market price of a bond, notes payable and lease liabilities, and capital budgeting and other investment proposals. There are times when depending on the item being measured, a company may have to calculate the present value of an annuity or the present value an unequal series of payments. Imagine that you are the accounting manager at Sandy's Logistics Company, explain to the assistant accountant, the difference between the present value of an annuity and the present value an unequal series of payments. Include in your explanation, how the present value of an annuity and the present value an unequal series of payments are calculated and give examples to show calculations. (You can use fictitious amounts and percentages in your examples.)
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Present Value of Annulty An annuity is a contract entered by an investor between a financial institu... View the full answer
Related Book For
Business Math
ISBN: 978-0133011203
10th edition
Authors: Cheryl Cleaves, Margie Hobbs, Jeffrey Noble
Posted Date:
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