Assume that you are going to receive $690,000 in 10 years. The current market rate of interest is 7%. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dollar. $fill in the blank 1 b. Why is the present value less than the $690,000 to be received in the future? The present value is less due to over the 10 years.
Assume that you are going to receive $690,000 in 10 years. The current market rate of interest is 7%. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dollar. $fill in the blank 1 b. Why is the present value less than the $690,000 to be received in the future? The present value is less due to over the 10 years.
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 9PROB
Related questions
Question
Present Value of Amounts Due
Assume that you are going to receive $690,000 in 10 years. The current market rate of interest is 7%.
a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dollar.
$fill in the blank 1
b. Why is the present value less than the $690,000 to be received in the future?
The present value is less due to over the 10 years.
Expert Solution
Step 1
a. Present value of this amount to be received after 10 years = Amount to be received x Present value of $1 (7%, 10 years)
= $690,000 x 0.50835
= $350,762
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
