Question: You will receive $6,800 three years from now. The discount rate is 10 percent. a. What is the value of your investment two years from

You will receive $6,800 three years from now. The discount rate is 10 percent.
a. What is the value of your investment two years from now? Multiply $6,800 × .909 (one year’s discount rate at 10 percent).
b. What is the value of your investment one year from now? Multiply your answer to part a by .909 (one year’s discount rate at 10 percent).
c. What is the value of your investment today? Multiply your answer to part b by .909 (one year’s discount rate at 10 percent).
d. Confirm that your answer to part c is correct by going to Appendix B (present value of $1) for n = 3 and i = 10%. Multiply this tabular value by $6,800 and compare your answer to part c. There may be a slight difference due to rounding.

Step by Step Solution

★★★★★

3.46 Rating (172 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a N IY PV PMT FV 1 10 CPT 618182 0 FV 6800 618182 b N I... View full answer

Question Has Been Solved by an Expert!

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

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

341-B-A-T-V-M (1549).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

On November 30, 2019, Davis Company had the following account balances: Debit Credit Cash $3,090 Accounts Receivable 9,900 Allowance for Doubtful Accounts $100 Inventory 17,750 Supplies 1,400 Land...

What is the share price when the discount rate is 13% and revenue growth is 15%? 36.70 35.47 36.83 39.70

Assume that the one-year U.S. interest rate is 10 percent and the one-year Canadian interest rate is 13 percent. If a U.S. firm invests its funds in Canada, by what percentage will the Canadian...

Currently, the risk-free rate is 10 percent and the expected return on the market portfolio is 15 percent. Market analysts' return expectations for four stocks are listed here, together with each...

4. You will receive JD 6,800 three years from now. The discount rate is 10 percent. a. What is the value of your investment two years from now? b. What is the value of your investment one year from...

You will receive $8,800 three years from now. The discount rate is 10 percent. a What is the value of your investment two years from now? Multiply $8,800 x .909 (one year's discount rate at 10...

4. You will receive $6,800 three years from now. The discount rate is 10 percent. a. What is the value of your investment two years from now? Multiply $6,800 x .909 ( one years discount rate at 10...

You will receive $8,800 three years from now. The discount rate is 10 percent. a. What is the value of your investment two years from now? Multiply $8,800 x .909 (one year's discount rate at 10...

You will receive $9,800 three years from now. The discount rate is 10 percent. a. What is the value of your investment two years from now? Multiply $9,800 .909 (one years discount rate at 10...

You will receive $8,500 three years from now. The discount rate is 10 percent. a. What is the value of your investment two years from now? Multiply $8,500 x 909 (one year's discount rate at 10...

You will receive $11,000 three years from now. The discount rate is 10 percent a. what is the value of your investment two years trom now? Multipy $11,000 x 909 (one year s discount rate at 10...

1) What are the most important general environment factors to be considered for the industry and the company and what is their effect (positive-negative-neutral)? What is your evidence for the...

1. Football is big business, raising millions and millions of dollars for American universities. Numerous administrators and officials at Pennsylvania State University put a higher value on college...

Show me how to solve step by step Question 8 . 4 ( Total: 3 0 marks ) Shred Zeppelin Company uses a process cost system for making skateboard wheels. Materials are added at the beginning of the...

Lock Tight, Inc., produces outside doors for installation on homes. The following information was gathered to prepare budgets for the upcoming year beginning January 1: Sales forecast in units . . ....

Deep Valley Foods manufactures a product that is first smoked and then packed for shipment to customers. During a normal month the product's direct labor cost per pound is budgeted using the...

The following information is from the manufacturing budget and the budgeted financial statements of Fabor Fabrication. Direct materials inventory, January 1 . . . . . . . . . . . . . . . . . . . . ....

On January 1, 2014, Pacelli Company acquired a 90% interest in Swartz Corporation for $720,000. On this date, Swartz Corporation reported common stock of $500,000 and retained earnings of $200,000....

After watching the video on outsourcing, discuss the following: 1. What role does the sourcing agent play in the 4Ps of marketing? 2. How does the outsourcing approach challenge the requirements of...

How is spatial analytics used in sports?

The Belton Corporation has $5 million in earnings after taxes and 1 million shares outstanding. The stock trades at a P/E of 10. The firm has $4 million in excess cash. a. Compute the current price...

Matrix Corp Inc. is considering a 15 percent stock dividend. The capital accounts are as follows: Common stock (4,000,000 shares) ........ . .. . .$ 40,000,000 Retained earnings ........................

Vegas Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years but is currently contemplating some kind of dividend. The capital accounts for the firm are...

Thorley Ltd owns five large poultry farms in Parramatta. The City of Parramatta Council has taken legal action against the pollution in the Parramatta River, especially the pollution from chicken...

The branch manager of an outlet (Store 1) of a nationwide chain of pet supply stores wants to study characteristics of her customers. In particular, she decides to focus on two variables: the amount...

Using the concept of confidence intervals, what can the following answer tell us? 45 democrats were asked whether they approved of new gun control laws. The following Confidence Interval was created...