   Chapter A3, Problem 12E ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

#### Solutions

Chapter
Section ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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# Practice with TablesRefer to the appropriate tables on pages 783-786.Required: Note: Round answers to two decimal places. Determine the:a. present value of \$1,200 to be received in 7 years, assuming that the interest (discount) rate is 8% per year.b. present value of an annuity of seven cash flows of \$1,200 each (one at the end of each of the next 7 years) for which the interest (discount) rate is 8% per year.c. future value of a single cash flow of \$1,200 that earns 8% per year for 7 years.d. future value of an annuity of seven cash flows of \$1,200 each (one at the end of each of the next 7 years), assuming that the interest rate is 8% per year.

To determine

Concept introduction:

Time value of money:

Time value of money is the concept that differentiates the value of money received today and the value of same money received in future. According to this concept, the same amount of money to be received in future shall have lower present value (value of the money today) due to the interest that could be earned on that money.

To calculate:

Future value and present value of the following:

Explanation

After collecting the following data we apply the above mentioned formula of present value and future value to get the answer.

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