Concept explainers
(a)
Present value: This is the amount of future value reduced or discounted at a rate of interest till particular current date.
Formula to compute present value:
To determine: The present value of $25,000 to be paid after 9 years, if discounted at 10%
(b)
Present value: This is the amount of future value reduced or discounted at a rate of interest till particular current date.
Formula to compute present value:
To determine: The present value of $25,000 received annually at the end of 6 years each, if discounted at 9%.
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Managerial Accounting: Tools for Business Decision Making
- (b) What is the present value of $32.500 to be received at the end of each of 6 periods, discounted at 9%?arrow_forwardWhat is the present value of $500 to be received 10.5 years from today when the annual discount rate is 8%? What is the present value of $2,000 to be received 2 years from today when the annual discount rate is 10%?arrow_forwardWhat is the present value of $25,000 to be recieved in 15 years at a (a) 6.2 percent rate and (b) 9.6 percent rate? Explain why the present value is lower when the interest rate is higher?arrow_forward
- 2) What would the present value be of $1,000 to be received 8 years from now discounted back at 3%?arrow_forwardUsing the appropriate interest table, answer each of the following questions. (Each case is independent of the others.) a. What is the future value of $7,000 at the end of 5 periods at 8% compounded interest? b. What is the present value of $7,000 due 8 periods hence, discounted at 6%? c. What is the future value of 15 periodic payments of $7,000 each made at the end of each period and compounded at 10%? d. What is the present value of $7,000 to be received at the end of each of 20 periods, discounted at 5% compound interest?arrow_forwardA. What is the present value of a $500 perpetuity if the interest rate is 9%? Round your answer to the nearest cent. B. If interest rates doubled to 18%, what would its present value be? Round your answer to the nearest cent.arrow_forward
- What is the present value of payments that are: year 0: 5000, year1: 10000, year2: 12500, year3: 15000? Discount factor 11%.arrow_forward(Present value) What is the present value of the following future amounts? a. $900 to be received 10 years from now discounted back to the present at 11 percent. b. $300 to be received 6 years from now discounted back to the present at 8 percent. c. $1,150 to be received 11 years from now discounted back to the present at 5 percent. d. $1,100 to be received 4 years from now discounted back to the present at 19 percent. a. What is the present value of $900 to be received 10 years from now discounted back to the present at 11 percent? $nothing (Round to the nearest cent.)arrow_forwardWhat is the present value of a cash payment of $1.2 that you will receive in 5.3 years if the interest rate is 6.5%? Round to 2 decimal places. Include dollar signs ($) and percents (%) as appropriate.arrow_forward
- a) What is the present value of the following payment series when the interest rate is 3% YR1 = $200YR2 = $100YR3 = $370YR4 = $370YR5 = $370YR6 = $-300 b) Convert the above payment series to a uniform payment series over 5 years, starting at year 1. c) Convert the payment series in question 6 to a uniform payment series over 3 years starting at year 3.arrow_forwardWhat is the present value of a 3-year annutiy of $220 if the discount rate is 6%.arrow_forward8. What is the present value of $100,0 00 received in 30 days if the discount rate is 3.0% annually? (Use simple interest formula) 9. What is the future value of $50,000 earning 2.25% annually for 90 days? (Use simple interest formula)1arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning