Determine the present value of $320,000 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 $fill in the blank 1 Second Year $fill in the blank 2 Third Year $fill in the blank 3 Fourth Year $fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. $fill in the blank 6 c. Why is the present value of the four $320,000 cash receipts less than the $1,280,000 to be received in the future?
Determine the present value of $320,000 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 $fill in the blank 1 Second Year $fill in the blank 2 Third Year $fill in the blank 3 Fourth Year $fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. $fill in the blank 6 c. Why is the present value of the four $320,000 cash receipts less than the $1,280,000 to be received in the future?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....
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Determine the
a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar.
| First year | $fill in the blank 1 |
| Second Year | $fill in the blank 2 |
| Third Year | $fill in the blank 3 |
| Fourth Year | $fill in the blank 4 |
| Total present value | $fill in the blank 5 |
b. By using the present value of an
$fill in the blank 6
c. Why is the present value of the four $320,000 cash receipts less than the $1,280,000 to be received in the future?
The present value is less due to over the 4 years.
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