The following table is for the present value of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 The following table is for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using these tables, if an investment is made now for $20,000 that will generate a cash inflow of $8,000 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%?
The following table is for the present value of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 The following table is for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using these tables, if an investment is made now for $20,000 that will generate a cash inflow of $8,000 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%?
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 3CE
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Question
- The following table is for the present value of $1 at compound interest.
|
Year |
6% |
10% |
12% |
|||
|
1 |
0.943 |
0.909 |
0.893 |
|||
|
2 |
0.890 |
0.826 |
0.797 |
|||
|
3 |
0.840 |
0.751 |
0.712 |
|||
|
4 |
0.792 |
0.683 |
0.636 |
|||
|
5 |
0.747 |
0.621 |
0.567 |
The following table is for the present value of an annuity of $1 at compound interest.
|
Year |
6% |
10% |
12% |
|||
|
1 |
0.943 |
0.909 |
0.893 |
|||
|
2 |
1.833 |
1.736 |
1.690 |
|||
|
3 |
2.673 |
2.487 |
2.402 |
|||
|
4 |
3.465 |
3.170 |
3.037 |
|||
|
5 |
4.212 |
3.791 |
3.605 |
Using these tables, if an investment is made now for $20,000 that will generate a
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