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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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What is the present value on January 1, 2019, of $40,000 to be received on January 1, 2022, and discounted 8% compounded annually?

To determine

Determine the present value on January 1, 2019.

Explanation

Present value of a single sum:

Present value of a single sum is the today’s amount of future value of a single sum discounted at a rate of interest till particular current date.

Future value –$40,000

Interest rate – 8% per annum, compounded annually

Number of years from January 1, 2019 to January 1, 2022 is 3 years.

Determine the present value on January 1, 2019.

PV=FV×(p

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