(a)

To determine

Calculate the present value of $200,000 (Future amount). ### Explanation of Solution Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value. Calculate the present value of$200,000 (Future amount) by using present value table in Exhibit

 Calculation Present Value First Year $200,000×0.93458$186,916 Second Year $200,000×0 (b) To determine Calculate the present value of$200,000 (Future amount) by using present value table in Exhibit 10.

(c)

To determine

Explain the reason why present value of four $200,000 cash receipts is less than$800,000 to be received in future.

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