For each of the following, compute the present value: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Present value years interest rate Future value 10 5% $17,528 2 11 41,717 14 13 792,382 19 13 649,816

For each of the following, compute the present value: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Present value years interest rate Future value 10 5% $17,528 2 11 41,717 14 13 792,382 19 13 649,816

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 7MC

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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.

Question

For each of the following, compute the present value: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Present value	years	interest rate	Future value
	10	5%	$17,528
	2	11	41,717
	14	13	792,382
	19	13	649,816

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Expert Solution

Step 1 Present value

Present value calculation is an important tool for financial management. This method shows what the value is today of some future sum of money. The present value of money to be received in the future will be less because we have lost the opportunity to invest it at some interest.

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