Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881



Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem

Use Future Value and Present Value Tables to Apply Compound Interest to Accounting Transactions

LuAnn Bean will receive 57,000 in 7 years.


What is the present value at 7% compounded annually? (Note: Round answers to two decimal places.)

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:

The Present value of future cash receipts.


The Present value of future cash receipts is calculated as follows:

Future value (A) $ 7,000
Annual return % 7%

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