Answered: Determine how much should be invested…

Determine how much should be invested for 10 years starting one from now if you want to withdraw 5,000,000 pesos 15 years from now. Assume the interest is compounded annually at 15% rate.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14EA: How much must be invested now to receive $30,000 for 10 years if the first $30.000 is received one...

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

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Determine how much should be invested for 10 years starting one from now if you want to withdraw 5,000,000 pesos 15 years from now. Assume the interest is compounded annually at 15% rate.

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