Present Value of an Annuity Determine the present value of $200,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows: a. By successive computations, using the present value table in Exhibit 8. Round to the nearest whole dollar. First year $fill in the blank 1 Second Year $fill in the blank 2 Third Year $fill in the blank 3 Fourth Year $fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value table in Exhibit 10. Round to the nearest whole dollar. $fill in the blank 6 c. Why is the present value of the four $200,000 cash receipts less than the $800,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years.

Present Value of an Annuity Determine the present value of $200,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows: a. By successive computations, using the present value table in Exhibit 8. Round to the nearest whole dollar. First year $fill in the blank 1 Second Year $fill in the blank 2 Third Year $fill in the blank 3 Fourth Year $fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value table in Exhibit 10. Round to the nearest whole dollar. $fill in the blank 6 c. Why is the present value of the four $200,000 cash receipts less than the $800,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 11E

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