JRT Publishers invests P100,000 today to be repaid in five years in one lump sum at 12% compounded annually. If the inflation is 4% compounded annually. How much profit, in today’s pesos, if realized over the five-year period? Formulas: a) Solving for the future account (F) F = P(1+i)ⁿ b) Solving for the equivalent future amount in today’s pesos due to 4% inflation: P = F / (1+ i)ⁿ c) Profit = P – F

JRT Publishers invests P100,000 today to be repaid in five years in one lump sum at 12% compounded annually. If the inflation is 4% compounded annually. How much profit, in today’s pesos, if realized over the five-year period? Formulas: a) Solving for the future account (F) F = P(1+i)ⁿ b) Solving for the equivalent future amount in today’s pesos due to 4% inflation: P = F / (1+ i)ⁿ c) Profit = P – F

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 11E

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