$27,831.47 $29,851.84 E S29,083.89 $30,729.84

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 14EB: How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one...
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Question
How much will you pay for an investment if you expect to receive $7.000 end of each years for
5 years and if the appropriate interest rate is 4.5%?
$27,831.47
$29,851.84
O $29,083.89
O $30,729.84
$38,294.97
O $8,723.27
Transcribed Image Text:How much will you pay for an investment if you expect to receive $7.000 end of each years for 5 years and if the appropriate interest rate is 4.5%? $27,831.47 $29,851.84 O $29,083.89 O $30,729.84 $38,294.97 O $8,723.27
Expert Solution
Step 1

The concept of the time value of money states that the current worth of money is more than its value in the future. 

Present value refers to the current value of a sum of money in the future at a specified interest rate.

The present value of annuity refers to the current value of some pre-defined amounts at regular time intervals at a particular interest rate.

The present value of money is the money without including interest which is the discounted value of money.

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